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GuruFocus has detected 2 Warning Signs with Bankrate Inc $RATE.
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Bankrate Inc (NYSE:RATE)
Beneish M-Score
-2.92 (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.

Bankrate Inc has a M-score of -2.92 suggests that the company is not a manipulator.

RATE' s Beneish M-Score Range Over the Past 10 Years
Min: -4.49   Max: 2.12
Current: -2.92

-4.49
2.12

During the past 13 years, the highest Beneish M-Score of Bankrate Inc was 2.12. The lowest was -4.49. And the median was -2.48.


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 Bankrate 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 * 0.6467+0.528 * 1.1989+0.404 * 0.9995+0.892 * 1.4244+0.115 * 1.1958
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9686+4.679 * -0.1235-0.327 * 1.1477
=-2.92

* 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 $50.7 Mil.
Revenue was 118.659 + 113.583 + 128.798 + 98.302 = $459.3 Mil.
Gross Profit was 55.465 + 50.973 + 64.282 + 45.661 = $216.4 Mil.
Total Current Assets was $279.1 Mil.
Total Assets was $1,084.4 Mil.
Property, Plant and Equipment(Net PPE) was $17.7 Mil.
Depreciation, Depletion and Amortization(DDA) was $43.2 Mil.
Selling, General & Admin. Expense(SGA) was $109.4 Mil.
Total Current Liabilities was $88.6 Mil.
Long-Term Debt was $296.4 Mil.
Net Income was -5.247 + -4.146 + 10.686 + -40.956 = $-39.7 Mil.
Non Operating Income was 0 + 0 + 0 + -0.265 = $-0.3 Mil.
Cash Flow from Operations was 18.27 + 42.531 + 19.544 + 14.228 = $94.6 Mil.
Accounts Receivable was $55.0 Mil.
Revenue was 93.478 + -44.632 + 140.76 + 132.865 = $322.5 Mil.
Gross Profit was 46.168 + 11.743 + 66.017 + 58.194 = $182.1 Mil.
Total Current Assets was $285.4 Mil.
Total Assets was $1,083.3 Mil.
Property, Plant and Equipment(Net PPE) was $10.7 Mil.
Depreciation, Depletion and Amortization(DDA) was $59.8 Mil.
Selling, General & Admin. Expense(SGA) was $79.3 Mil.
Total Current Liabilities was $41.2 Mil.
Long-Term Debt was $293.9 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)
=(50.675 / 459.342) / (55.013 / 322.471)
=0.11032085 / 0.17059829
=0.6467

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)
=(182.122 / 322.471) / (216.381 / 459.342)
=0.56477017 / 0.47106731
=1.1989

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 - (279.143 + 17.719) / 1084.387) / (1 - (285.388 + 10.742) / 1083.279)
=0.7262398 / 0.72663552
=0.9995

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
=459.342 / 322.471
=1.4244

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))
=(59.808 / (59.808 + 10.742)) / (43.162 / (43.162 + 17.719))
=0.84773919 / 0.70895682
=1.1958

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)
=(109.352 / 459.342) / (79.254 / 322.471)
=0.23806227 / 0.24577094
=0.9686

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)
=((296.355 + 88.58) / 1084.387) / ((293.881 + 41.187) / 1083.279)
=0.35497936 / 0.30930905
=1.1477

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
=(-39.663 - -0.265 - 94.573) / 1084.387
=-0.1235

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.

Bankrate Inc has a M-score of -2.92 suggests that the company will not 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.

Bankrate Inc Annual Data

Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15Dec16
DSRI 1.00470.67860.75321.90150.73680.80611.17730.961.16530.7936
GMI 0.94131.20821.06540.92430.9270.9731.0151.63780.76251.1271
AQI 1.26772.18211.11981.02471.03560.99250.87531.04630.89931.0401
SGI 1.20021.74550.7881.67781.9231.07771.00061.19130.681.1717
DEPI 0.9710.76880.89941.02771.02440.98461.02131.00970.9341.1917
SGAI 0.91170.8081.35160.65071.24381.23111.02180.42481.29861.0627
LVGI 1.33751.71555.58970.80180.59870.96131.3891.01881.05781.02
TATA -0.0361-0.0851-0.1169-0.0466-0.0397-0.0436-0.0757-0.0296-0.0928-0.1051
M-score -2.49-2.15-4.93-1.17-2.02-2.84-2.84-2.04-3.29-2.92

Bankrate Inc Quarterly Data

Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16Dec16Mar17
DSRI 0.95920.8981.04531.16631.17681.29850.79360.6467
GMI 1.27181.41451.57480.98190.83580.71841.12451.1989
AQI 1.04631.06811.03960.89930.92871.00271.04010.9995
SGI 1.19241.1341.08250.67930.58580.52091.17171.4244
DEPI 1.00970.99951.02970.9340.95380.9411.19171.1958
SGAI 0.74070.60960.42730.74481.00231.90271.06750.9686
LVGI 1.01881.03681.02961.05781.05551.14781.021.1477
TATA -0.0208-0.0277-0.0325-0.0721-0.0698-0.1139-0.1048-0.1235
M-score -2.24-2.28-2.11-2.98-3.15-3.52-2.92-2.92
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