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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.
Zillow Inc has a M-score of -2.48 suggests that the company is not a manipulator.
During the past 5 years, the highest Beneish M-Score of Zillow Inc was -1.66. The lowest was -2.82. And the median was -2.25.
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 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 * 0.9012||+||0.528 * 0.9855||+||0.404 * 0.9809||+||0.892 * 1.6865||+||0.115 * 1.0236|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0205||+||4.679 * -0.1053||-||0.327 * 1.041|
|This Year (Jun14) TTM:||Last Year (Jun13) TTM:|
|Accounts Receivable was $19.9 Mil.|
Revenue was 78.675 + 66.243 + 58.348 + 53.311 = $256.6 Mil.
Gross Profit was 71.882 + 60.079 + 53.078 + 48.195 = $233.2 Mil.
Total Current Assets was $384.4 Mil.
Total Assets was $641.5 Mil.
Property, Plant and Equipment(Net PPE) was $34.0 Mil.
Depreciation, Depletion and Amortization(DDA) was $30.0 Mil.
Selling, General & Admin. Expense(SGA) was $189.6 Mil.
Total Current Liabilities was $47.5 Mil.
Long-Term Debt was $0.0 Mil.
Net Income was -10.477 + -6.259 + 2.715 + -1.189 = $-15.2 Mil.
Non Operating Income was 0.284 + 0.219 + 0.145 + 0.07 = $0.7 Mil.
Cash Flow from Operations was 14.67 + 14.205 + 18.762 + 3.99 = $51.6 Mil.
|Accounts Receivable was $13.1 Mil.
Revenue was 46.92 + 38.966 + 34.337 + 31.915 = $152.1 Mil.
Gross Profit was 42.626 + 34.836 + 30.531 + 28.292 = $136.3 Mil.
Total Current Assets was $185.9 Mil.
Total Assets was $317.5 Mil.
Property, Plant and Equipment(Net PPE) was $19.1 Mil.
Depreciation, Depletion and Amortization(DDA) was $17.6 Mil.
Selling, General & Admin. Expense(SGA) was $110.2 Mil.
Total Current Liabilities was $22.6 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)|
|=||(19.885 / 256.577)||/||(13.083 / 152.138)|
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)|
|=||(60.079 / 152.138)||/||(71.882 / 256.577)|
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 - (384.415 + 34.011) / 641.473)||/||(1 - (185.854 + 19.117) / 317.532)|
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))|
|=||(17.622 / (17.622 + 19.117))||/||(29.99 / (29.99 + 34.011))|
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)|
|=||(189.625 / 256.577)||/||(110.18 / 152.138)|
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 + 47.53) / 641.473)||/||((0 + 22.6) / 317.532)|
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|
|=||(-15.21 - 0.718||-||51.627)||/||641.473|
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 Inc has a M-score of -2.48 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 Inc Annual Data
Zillow Inc Quarterly Data