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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 -2.79 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 -2.27.
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 * 0.8246||+||0.528 * 0.9877||+||0.404 * 1.0628||+||0.892 * 1.6822||+||0.115 * 1.0109|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9485||+||4.679 * -0.1279||-||0.327 * 1.5709|
|This Year (Sep14) TTM:||Last Year (Sep13) TTM:|
|Accounts Receivable was $21.8 Mil.|
Revenue was 88.646 + 78.675 + 66.243 + 58.348 = $291.9 Mil.
Gross Profit was 80.967 + 71.882 + 60.079 + 53.078 = $266.0 Mil.
Total Current Assets was $397.0 Mil.
Total Assets was $649.2 Mil.
Property, Plant and Equipment(Net PPE) was $38.3 Mil.
Depreciation, Depletion and Amortization(DDA) was $33.2 Mil.
Selling, General & Admin. Expense(SGA) was $211.0 Mil.
Total Current Liabilities was $53.5 Mil.
Long-Term Debt was $0.0 Mil.
Net Income was -15.977 + -10.477 + -6.259 + 2.715 = $-30.0 Mil.
Non Operating Income was 0.265 + 0.284 + 0.219 + 0.145 = $0.9 Mil.
Cash Flow from Operations was 4.482 + 14.67 + 14.205 + 18.762 = $52.1 Mil.
|Accounts Receivable was $15.7 Mil.
Revenue was 53.311 + 46.92 + 38.966 + 34.337 = $173.5 Mil.
Gross Profit was 48.195 + 42.626 + 34.836 + 30.531 = $156.2 Mil.
Total Current Assets was $385.8 Mil.
Total Assets was $591.7 Mil.
Property, Plant and Equipment(Net PPE) was $22.5 Mil.
Depreciation, Depletion and Amortization(DDA) was $19.9 Mil.
Selling, General & Admin. Expense(SGA) was $132.2 Mil.
Total Current Liabilities was $31.0 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)|
|=||(21.794 / 291.912)||/||(15.712 / 173.534)|
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)|
|=||(71.882 / 173.534)||/||(80.967 / 291.912)|
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 - (397.035 + 38.335) / 649.21)||/||(1 - (385.759 + 22.528) / 591.661)|
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))|
|=||(19.882 / (19.882 + 22.528))||/||(33.152 / (33.152 + 38.335))|
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)|
|=||(210.965 / 291.912)||/||(132.221 / 173.534)|
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 + 53.461) / 649.21)||/||((0 + 31.015) / 591.661)|
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|
|=||(-29.998 - 0.913||-||52.119)||/||649.21|
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 -2.79 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