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The zones of discrimination for M-Score is as such:
An M-Score of less than -2.22 suggests that the company is not an accounting manipulator.
An M-Score of greater than -2.22 signals that the company is likely an accounting manipulator.
During the past 6 years, the highest Beneish M-Score of Zillow Group Inc was -1.92. The lowest was -3.03. And the median was -2.82.
The M-score was created by Professor Messod Beneish. Instead of measuring the bankruptcy risk (Z-Score) or business trend (F-Score), M-score can be used to detect the risk of earnings manipulation. This is the original research paper on M-score.
The M-Score Variables:
The M-score of Zillow Group Inc for today is based on a combination of the following eight different indices:
|M||=||-4.84||+||0.92 * DSRI||+||0.528 * GMI||+||0.404 * AQI||+||0.892 * SGI||+||0.115 * DEPI|
|=||-4.84||+||0.92 * 0.7434||+||0.528 * 0.9947||+||0.404 * 0.7299||+||0.892 * 1.6497||+||0.115 * 0.995|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9637||+||4.679 * -0.1388||-||0.327 * 1.4119|
|This Year (Dec14) TTM:||Last Year (Dec13) TTM:|
|Accounts Receivable was $18.7 Mil.|
Revenue was 92.329 + 88.646 + 78.675 + 66.243 = $325.9 Mil.
Gross Profit was 83.504 + 80.967 + 71.882 + 60.079 = $296.4 Mil.
Total Current Assets was $401.3 Mil.
Total Assets was $649.7 Mil.
Property, Plant and Equipment(Net PPE) was $41.6 Mil.
Depreciation, Depletion and Amortization(DDA) was $35.6 Mil.
Selling, General & Admin. Expense(SGA) was $233.4 Mil.
Total Current Liabilities was $49.2 Mil.
Long-Term Debt was $0.0 Mil.
Net Income was -10.897 + -15.977 + -10.477 + -6.259 = $-43.6 Mil.
Non Operating Income was 0.317 + 0.265 + 0.284 + 0.219 = $1.1 Mil.
Cash Flow from Operations was 12.162 + 4.482 + 14.67 + 14.205 = $45.5 Mil.
|Accounts Receivable was $15.2 Mil.
Revenue was 58.348 + 53.311 + 46.92 + 38.966 = $197.5 Mil.
Gross Profit was 53.078 + 48.195 + 42.626 + 34.836 = $178.7 Mil.
Total Current Assets was $315.5 Mil.
Total Assets was $608.1 Mil.
Property, Plant and Equipment(Net PPE) was $27.4 Mil.
Depreciation, Depletion and Amortization(DDA) was $23.3 Mil.
Selling, General & Admin. Expense(SGA) was $146.8 Mil.
Total Current Liabilities was $32.6 Mil.
Long-Term Debt was $0.0 Mil.
1. DSRI = Days Sales in Receivables Index
A large increase in DSR could be indicative of revenue inflation.
|DSRI||=||(Receivables_t / Revenue_t)||/||(Receivables_t-1 / Revenue_t-1)|
|=||(18.684 / 325.893)||/||(15.234 / 197.545)|
2. GMI = Gross Margin Index
Measured as the ratio of gross margin in year t-1 to gross margin in year t.
Gross margin has deteriorated when this index is above 1. A firm with poorer prospects is more likely to manipulate earnings.
|=||(GrossProfit_t-1 / Revenue_t-1)||/||(GrossProfit_t / Revenue_t)|
|=||(80.967 / 197.545)||/||(83.504 / 325.893)|
3. AQI = Asset Quality Index
AQI is the ratio of asset quality in year t to year t-1.
|AQI||=||(1 - (CurrentAssets_t + PPE_t) / TotalAssets_t)||/||(1 - (CurrentAssets_t-1 + PPE_t-1) / TotalAssets_t-1)|
|=||(1 - (401.337 + 41.6) / 649.73)||/||(1 - (315.512 + 27.408) / 608.063)|
4. SGI = Sales Growth Index
Ratio of sales in year t to sales in year t-1.
Sales growth is not itself a measure of manipulation. However, growth companies are likely to find themselves under pressure to manipulate in order to keep up appearances.
5. DEPI = Depreciation Index
Measured as the ratio of the rate of depreciation in year t-1 to the corresponding rate in year t.
DEPI greater than 1 indicates that assets are being depreciated at a slower rate. This suggests that the firm might be revising useful asset life assumptions upwards, or adopting a new method that is income friendly.
|DEPI||=||(Depreciation_t-1 / (Depreciaton_t-1 + PPE_t-1))||/||(Depreciation_t / (Depreciaton_t + PPE_t))|
|=||(23.254 / (23.254 + 27.408))||/||(35.624 / (35.624 + 41.6))|
6. SGAI = Sales, General and Administrative expenses Index
The ratio of SGA expenses in year t relative to year t-1.
SGA expenses index > 1 means that the company is becoming less efficient in generate sales.
|SGAI||=||(SGA_t / Sales_t)||/||(SGA_t-1 /Sales_t-1)|
|=||(233.412 / 325.893)||/||(146.81 / 197.545)|
7. LVGI = Leverage Index
The ratio of total debt to total assets in year t relative to yeat t-1.
An LVGI > 1 indicates an increase$sgai= in leverage
|LVGI||=||((LTD_t + CurrentLiabilities_t) / TotalAssets_t)||/||((LTD_t-1 + CurrentLiabilities_t-1) / TotalAssets_t-1)|
|=||((0 + 49.196) / 649.73)||/||((0 + 32.609) / 608.063)|
8. TATA = Total Accruals to Total Assets
Total accruals calculated as the change in working capital accounts other than cash less depreciation.
|=||(NetIncome_t - NonOperatingIncome_t||-||CashFlowsfromOperations_t)||/||TotalAssets_t|
|=||(-43.61 - 1.085||-||45.519)||/||649.73|
An M-Score of less than -2.22 suggests that the company will not be a manipulator. An M-Score of greater than -2.22 signals that the company is likely to be a manipulator.
Zillow Group Inc has a M-score of -3.03 suggests that the company will not be a manipulator.
Altman Z-Score, Piotroski F-Score, Accounts Receivable, Revenue, Gross Profit, Total Current Assets, Total Assets, Property, Plant and Equipment, Depreciation, Depletion and Amortization, Selling, General & Admin. Expense, Total Current Liabilities, Long-Term Debt, Net Income, Non Operating Income, Cash Flow from Operations
Zillow Group Inc Annual Data
Zillow Group Inc Quarterly Data