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GuruFocus has detected 5 Warning Signs with eBay Inc $EBAY.
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eBay Inc (NAS:EBAY)
Beneish M-Score
-1.31 (As of Today)

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.

eBay Inc has a M-score of -1.31 signals that the company is a manipulator.

EBAY' s Beneish M-Score Range Over the Past 10 Years
Min: -3.58   Max: -1.31
Current: -1.31

-3.58
-1.31

During the past 13 years, the highest Beneish M-Score of eBay Inc was -1.31. The lowest was -3.58. And the median was -2.63.


Definition

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 eBay 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 * 0.9457+0.528 * 1.0178+0.404 * 1.3931+0.892 * 1.0451+0.115 * 1.0157
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9606+4.679 * 0.2003-0.327 * 0.7941
=-1.31

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

This Year (Mar17) TTM:Last Year (Mar16) TTM:
Accounts Receivable was $592 Mil.
Revenue was 2217 + 2395 + 2217 + 2230 = $9,059 Mil.
Gross Profit was 1702 + 1856 + 1719 + 1737 = $7,014 Mil.
Total Current Assets was $8,493 Mil.
Total Assets was $24,808 Mil.
Property, Plant and Equipment(Net PPE) was $1,496 Mil.
Depreciation, Depletion and Amortization(DDA) was $678 Mil.
Selling, General & Admin. Expense(SGA) was $3,328 Mil.
Total Current Liabilities was $4,433 Mil.
Long-Term Debt was $6,756 Mil.
Net Income was 1035 + 5936 + 413 + 435 = $7,819 Mil.
Non Operating Income was 0 + 83 + 0 + 0 = $83 Mil.
Cash Flow from Operations was 582 + 620 + 802 + 763 = $2,767 Mil.
Accounts Receivable was $599 Mil.
Revenue was 2137 + 2322 + 2099 + 2110 = $8,668 Mil.
Gross Profit was 1660 + 1829 + 1666 + 1676 = $6,831 Mil.
Total Current Assets was $9,703 Mil.
Total Assets was $19,608 Mil.
Property, Plant and Equipment(Net PPE) was $1,497 Mil.
Depreciation, Depletion and Amortization(DDA) was $694 Mil.
Selling, General & Admin. Expense(SGA) was $3,315 Mil.
Total Current Liabilities was $2,107 Mil.
Long-Term Debt was $9,030 Mil.



1. DSRI = Days Sales in Receivables Index

Measured as the ratio of days’ sales in receivables in year t to year t-1.

A large increase in DSR could be indicative of revenue inflation.

DSRI=(Receivables_t / Revenue_t) / (Receivables_t-1 / Revenue_t-1)
=(592 / 9059) / (599 / 8668)
=0.06534938 / 0.06910475
=0.9457

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.

GMI=GrossMargin_t-1 / GrossMargin_t
=(GrossProfit_t-1 / Revenue_t-1) / (GrossProfit_t / Revenue_t)
=(6831 / 8668) / (7014 / 9059)
=0.78807107 / 0.77425764
=1.0178

3. AQI = Asset Quality Index

AQI is the ratio of asset quality in year t to year t-1.

Asset quality is measured as the ratio of non-current assets other than plant, property and equipment to total assets.

AQI=(1 - (CurrentAssets_t + PPE_t) / TotalAssets_t) / (1 - (CurrentAssets_t-1 + PPE_t-1) / TotalAssets_t-1)
=(1 - (8493 + 1496) / 24808) / (1 - (9703 + 1497) / 19608)
=0.59734763 / 0.42880457
=1.3931

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.

SGI=Sales_t / Sales_t-1
=Revenue_t / Revenue_t-1
=9059 / 8668
=1.0451

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))
=(694 / (694 + 1497)) / (678 / (678 + 1496))
=0.31675034 / 0.31186753
=1.0157

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)
=(3328 / 9059) / (3315 / 8668)
=0.36736947 / 0.38244116
=0.9606

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)
=((6756 + 4433) / 24808) / ((9030 + 2107) / 19608)
=0.45102386 / 0.56798246
=0.7941

8. TATA = Total Accruals to Total Assets

Total accruals calculated as the change in working capital accounts other than cash less depreciation.

TATA=(IncomefromContinuingOperations_t - CashFlowsfromOperations_t) / TotalAssets_t
=(NetIncome_t - NonOperatingIncome_t - CashFlowsfromOperations_t) / TotalAssets_t
=(7819 - 83 - 2767) / 24808
=0.2003

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.

eBay Inc has a M-score of -1.31 signals that the company is likely to be a manipulator.


Related Terms

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


Historical Data

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

eBay Inc Annual Data

Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15Dec16
DSRI 0.9510.81350.91641.04751.19670.9981.86390.62691.05540.9152
GMI 1.0251.0421.03250.99431.02421.00370.85491.01051.02131.0224
AQI 0.83121.12160.90210.92141.07330.76671.04681.01871.23231.2075
SGI 1.28521.11331.02181.04911.27261.20770.58681.06460.97751.045
DEPI 1.01030.93120.98331.15671.02680.98811.68470.61351.02610.988
SGAI 0.92280.83971.12260.87930.97940.97651.15041.03471.04090.9227
LVGI 1.08081.1780.83261.3751.11131.3410.99621.33360.94240.9382
TATA -0.1492-0.0707-0.0282-0.0394-0.0548-0.0365-0.0542-0.1245-0.12930.1827
M-score -3.04-2.85-2.66-2.70-2.30-2.67-2.31-3.49-2.93-1.54

eBay Inc Quarterly Data

Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16Dec16Mar17
DSRI 0.42930.71560.90070.66541.54151.04560.93311.01510.91520.9457
GMI 1.11291.04841.0151.10380.92730.9771.02431.02571.02241.0178
AQI 1.01870.89720.78831.29221.23231.25021.36710.96481.20751.3931
SGI 1.55481.21270.96081.18440.66930.81491.01671.03641.0451.0451
DEPI 0.61351.55361.44740.1591.02610.42630.40150.9990.9881.0157
SGAI 0.90780.98751.07050.95251.18651.06520.92250.93450.92270.9606
LVGI 1.33361.11091.0031.14470.94241.04361.07970.9020.93820.7941
TATA -0.1245-0.059-0.0635-0.1283-0.1293-0.0984-0.0593-0.06960.18270.2003
M-score -3.16-2.81-2.94-3.19-2.84-3.07-2.72-2.72-1.54-1.31
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