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Shopify (Shopify) Beneish M-Score

: -2.49 (As of Today)
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The zones of discrimination for M-Score is as such:

An M-Score of equal or less than -1.78 suggests that the company is unlikely to be a manipulator.
An M-Score of greater than -1.78 signals that the company is likely to be a manipulator.

Good Sign:

Beneish M-Score -2.49 no higher than -1.78, which implies that the company is unlikely to be a manipulator.

The historical rank and industry rank for Shopify's Beneish M-Score or its related term are showing as below:

SHOP' s Beneish M-Score Range Over the Past 10 Years
Min: -2.77   Med: -1.87   Max: -0.57
Current: -2.49

During the past 12 years, the highest Beneish M-Score of Shopify was -0.57. The lowest was -2.77. And the median was -1.87.


Shopify Beneish M-Score Historical Data

The historical data trend for Shopify's Beneish M-Score can be seen below:

* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD.
* For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.

* Premium members only.

Shopify Annual Data
Trend Dec14 Dec15 Dec16 Dec17 Dec18 Dec19 Dec20 Dec21 Dec22 Dec23
Beneish M-Score
Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only -0.57 -2.16 -0.83 -2.50 -2.49

Shopify Quarterly Data
Mar19 Jun19 Sep19 Dec19 Mar20 Jun20 Sep20 Dec20 Mar21 Jun21 Sep21 Dec21 Mar22 Jun22 Sep22 Dec22 Mar23 Jun23 Sep23 Dec23
Beneish M-Score Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only -2.50 -2.49 -2.61 -2.77 -2.49

Competitive Comparison

For the Software - Application subindustry, Shopify's Beneish M-Score, along with its competitors' market caps and Beneish M-Score data, can be viewed below:

* Competitive companies are chosen from companies within the same industry, with headquarter located in same country, with closest market capitalization; x-axis shows the market cap, and y-axis shows the term value; the bigger the dot, the larger the market cap. Note that "N/A" values will not show up in the chart.


Shopify Beneish M-Score Distribution

For the Software industry and Technology sector, Shopify's Beneish M-Score distribution charts can be found below:

* The bar in red indicates where Shopify's Beneish M-Score falls into.



Shopify Beneish M-Score Calculation

The M-score was created by Professor Messod Beneish. Instead of measuring the bankruptcy risk (Altman Z-Score) or business trend (Piotroski 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 Shopify 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 * 1.0352+0.528 * 0.9878+0.404 * 1.1+0.892 * 1.2607+0.115 * 0.4983
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.7003+4.679 * -0.073812-0.327 * 0.8655
=-2.49

* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD.
* For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.

This Year (Dec23) TTM:Last Year (Dec22) TTM:
Total Receivables was $1,155 Mil.
Revenue was 2144 + 1714 + 1694 + 1508 = $7,060 Mil.
Gross Profit was 1062 + 901 + 835 + 717 = $3,515 Mil.
Total Current Assets was $6,275 Mil.
Total Assets was $11,299 Mil.
Property, Plant and Equipment(Net PPE) was $147 Mil.
Depreciation, Depletion and Amortization(DDA) was $69 Mil.
Selling, General, & Admin. Expense(SGA) was $1,711 Mil.
Total Current Liabilities was $898 Mil.
Long-Term Debt & Capital Lease Obligation was $1,133 Mil.
Net Income was 657 + 718 + -1311 + 68 = $132 Mil.
Non Operating Income was 325 + 543 + -1063 + 217 = $22 Mil.
Cash Flow from Operations was 448 + 278 + 118 + 100 = $944 Mil.
Total Receivables was $885 Mil.
Revenue was 1735 + 1366 + 1295 + 1204 = $5,600 Mil.
Gross Profit was 798 + 662 + 656 + 638 = $2,754 Mil.
Total Current Assets was $6,050 Mil.
Total Assets was $10,757 Mil.
Property, Plant and Equipment(Net PPE) was $486 Mil.
Depreciation, Depletion and Amortization(DDA) was $92 Mil.
Selling, General, & Admin. Expense(SGA) was $1,938 Mil.
Total Current Liabilities was $856 Mil.
Long-Term Debt & Capital Lease Obligation was $1,378 Mil.




1. DSRI = Days Sales in Receivables Index

Measured as the ratio of Revenue in Total 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)
=(1155 / 7060) / (885 / 5600)
=0.163598 / 0.158036
=1.0352

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)
=(2754 / 5600) / (3515 / 7060)
=0.491786 / 0.497875
=0.9878

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 Property, Plant and Equipment to Total Assets.

AQI=(1 - (CurrentAssets_t + PPE_t) / TotalAssets_t) / (1 - (CurrentAssets_t-1 + PPE_t-1) / TotalAssets_t-1)
=(1 - (6275 + 147) / 11299) / (1 - (6050 + 486) / 10757)
=0.431631 / 0.392396
=1.1

4. SGI = Sales Growth Index

Ratio of Revenue 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
=7060 / 5600
=1.2607

5. DEPI = Depreciation Index

Measured as the ratio of the rate of Depreciation, Depletion and Amortization 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))
=(92 / (92 + 486)) / (69 / (69 + 147))
=0.15917 / 0.319444
=0.4983

Note: If the Depreciation, Depletion and Amortization data is not available, we assume that the depreciation rate is constant and set the Depreciation Index to 1.

6. SGAI = Sales, General and Administrative expenses Index

The ratio of Selling, General, & Admin. Expense(SGA) to Sales 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)
=(1711 / 7060) / (1938 / 5600)
=0.242351 / 0.346071
=0.7003

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 in leverage

LVGI=((LTD_t + CurrentLiabilities_t) / TotalAssets_t) / ((LTD_t-1 + CurrentLiabilities_t-1) / TotalAssets_t-1)
=((1133 + 898) / 11299) / ((1378 + 856) / 10757)
=0.17975 / 0.207679
=0.8655

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
=(132 - 22 - 944) / 11299
=-0.073812

An M-Score of equal or less than -1.78 suggests that the company is unlikely to be a manipulator. An M-Score of greater than -1.78 signals that the company is likely to be a manipulator.

Shopify has a M-score of -2.49 suggests that the company is unlikely to be a manipulator.


Shopify Beneish M-Score Related Terms

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Shopify (Shopify) Business Description

Address
151 O'Connor Street, Ground Floor, Ottawa, ON, CAN, K2P2L8
Shopify offers an e-commerce platform primarily to small and medium-size businesses. The firm has two segments. The subscription solutions segment allows Shopify merchants to conduct e-commerce on a variety of platforms, including the company's website, physical stores, pop-up stores, kiosks, social networks (Facebook), and Amazon. The merchant solutions segment offers add-on products for the platform that facilitate e-commerce and include Shopify Payments, Shopify Shipping, and Shopify Capital.

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