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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 8 years, the highest Beneish M-Score of Zillow Group Inc was -1.42. The lowest was -3.18. And the median was -2.09.
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 * 0.8605||+||0.528 * 0.988||+||0.404 * 0.9929||+||0.892 * 1.3132||+||0.115 * 0.9263|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.1077||+||4.679 * -0.0664||-||0.327 * 1.4902|
|This Year (Dec16) TTM:||Last Year (Dec15) TTM:|
|Accounts Receivable was $30.9 Mil.|
Revenue was 227.612 + 224.592 + 208.403 + 185.982 = $846.6 Mil.
Gross Profit was 207.947 + 206.338 + 191.183 + 169.53 = $775.0 Mil.
Total Current Assets was $581.8 Mil.
Total Assets was $3,149.7 Mil.
Property, Plant and Equipment(Net PPE) was $98.3 Mil.
Depreciation, Depletion and Amortization(DDA) was $100.6 Mil.
Selling, General & Admin. Expense(SGA) was $694.6 Mil.
Total Current Liabilities was $97.2 Mil.
Long-Term Debt was $367.4 Mil.
Net Income was -23.491 + 6.807 + -156.149 + -47.605 = $-220.4 Mil.
Non Operating Income was -22.041 + 0.561 + 0.753 + 0.681 = $-20.0 Mil.
Cash Flow from Operations was 39.081 + 30.093 + -79.447 + 18.918 = $8.6 Mil.
|Accounts Receivable was $27.4 Mil.
Revenue was 169.37 + 176.765 + 171.269 + 127.273 = $644.7 Mil.
Gross Profit was 154.265 + 160.312 + 154.232 + 114.254 = $583.1 Mil.
Total Current Assets was $574.1 Mil.
Total Assets was $3,135.7 Mil.
Property, Plant and Equipment(Net PPE) was $85.5 Mil.
Depreciation, Depletion and Amortization(DDA) was $75.4 Mil.
Selling, General & Admin. Expense(SGA) was $477.5 Mil.
Total Current Liabilities was $80.4 Mil.
Long-Term Debt was $230.0 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)|
|=||(30.921 / 846.589)||/||(27.362 / 644.677)|
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)|
|=||(583.063 / 644.677)||/||(774.998 / 846.589)|
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 - (581.806 + 98.288) / 3149.677)||/||(1 - (574.094 + 85.523) / 3135.7)|
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))|
|=||(75.386 / (75.386 + 85.523))||/||(100.59 / (100.59 + 98.288))|
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)|
|=||(694.614 / 846.589)||/||(477.534 / 644.677)|
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)|
|=||((367.404 + 97.242) / 3149.677)||/||((230 + 80.422) / 3135.7)|
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|
|=||(-220.438 - -20.046||-||8.645)||/||3149.677|
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 -2.84 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