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GuruFocus has detected 2 Warning Signs with Travelzoo $TZOO.
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Travelzoo (NAS:TZOO)
Beneish M-Score
-2.62 (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.

Travelzoo has a M-score of -2.62 suggests that the company is not a manipulator.

TZOO' s Beneish M-Score Range Over the Past 10 Years
Min: -4.25   Max: 1.65
Current: -2.62

-4.25
1.65

During the past 13 years, the highest Beneish M-Score of Travelzoo was 1.65. The lowest was -4.25. And the median was -2.12.


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 Travelzoo 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 * 0.8896+0.528 * 0.9715+0.404 * 1.2234+0.892 * 0.9159+0.115 * 0.868
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0205+4.679 * -0.0041-0.327 * 0.9878
=-2.62

* 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 $14.2 Mil.
Revenue was 28.429 + 29.262 + 30.44 + 34.046 = $122.2 Mil.
Gross Profit was 25.222 + 25.931 + 27.079 + 30.434 = $108.7 Mil.
Total Current Assets was $44.6 Mil.
Total Assets was $54.2 Mil.
Property, Plant and Equipment(Net PPE) was $5.7 Mil.
Depreciation, Depletion and Amortization(DDA) was $2.5 Mil.
Selling, General & Admin. Expense(SGA) was $89.8 Mil.
Total Current Liabilities was $29.5 Mil.
Long-Term Debt was $0.0 Mil.
Net Income was 2.744 + 0.943 + 1.619 + 2.02 = $7.3 Mil.
Non Operating Income was 0.007 + -0.48 + 0.251 + -0.091 = $-0.3 Mil.
Cash Flow from Operations was 0.555 + 6.806 + -1.989 + 2.491 = $7.9 Mil.
Accounts Receivable was $17.4 Mil.
Revenue was 30.828 + 32.051 + 33.728 + 36.792 = $133.4 Mil.
Gross Profit was 26.977 + 27.723 + 28.986 + 31.584 = $115.3 Mil.
Total Current Assets was $51.1 Mil.
Total Assets was $62.1 Mil.
Property, Plant and Equipment(Net PPE) was $7.4 Mil.
Depreciation, Depletion and Amortization(DDA) was $2.6 Mil.
Selling, General & Admin. Expense(SGA) was $96.0 Mil.
Total Current Liabilities was $34.2 Mil.
Long-Term Debt was $0.0 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)
=(14.189 / 122.177) / (17.414 / 133.399)
=0.11613479 / 0.13054071
=0.8896

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)
=(115.27 / 133.399) / (108.666 / 122.177)
=0.86409943 / 0.88941454
=0.9715

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 - (44.631 + 5.731) / 54.169) / (1 - (51.133 + 7.374) / 62.073)
=0.07028005 / 0.05744849
=1.2234

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
=122.177 / 133.399
=0.9159

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))
=(2.607 / (2.607 + 7.374)) / (2.467 / (2.467 + 5.731))
=0.26119627 / 0.30092706
=0.868

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)
=(89.757 / 122.177) / (96.033 / 133.399)
=0.73464727 / 0.71989295
=1.0205

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 + 29.503) / 54.169) / ((0 + 34.225) / 62.073)
=0.54464731 / 0.55136694
=0.9878

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
=(7.326 - -0.313 - 7.863) / 54.169
=-0.0041

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.

Travelzoo has a M-score of -2.62 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.

Travelzoo Annual Data

Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15Dec16
DSRI 1.20751.11480.85230.98180.76321.00230.90931.33211.05981
GMI 1.0121.01391.02131.00471.02771.01631.00461.02031.00790.9783
AQI 2.71033.07341.75681.23650.98921.02080.60171.07451.10741.0304
SGI 1.1351.02551.16121.20021.31531.01911.12880.86550.95960.8791
DEPI 1.82571.69250.42710.79720.94731.17081.34741.14960.91740.8953
SGAI 1.27821.22110.91340.91560.92731.0490.99561.07130.96540.9952
LVGI 1.71291.30130.74581.05381.62340.99681.37710.75171.29440.9315
TATA -0.0258-0.03660.003-0.1602-0.1846-0.1923-0.19610.17060.1154-0.0356
M-score -1.78-1.73-2.11-3.00-3.47-3.33-3.61-1.37-1.97-2.74

Travelzoo Quarterly Data

Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16Dec16Mar17
DSRI 1.33211.19661.17831.28781.05981.19821.18741.058610.8896
GMI 1.02031.01261.01621.01411.00791.01230.99480.98420.97830.9715
AQI 1.07450.73950.71840.97911.10741.48351.12020.81321.03041.2234
SGI 0.86550.86940.89240.88180.95960.90980.89160.88470.87910.9159
DEPI 1.14960.88070.8670.91040.91741.00831.05231.00320.89530.868
SGAI 1.07131.08311.08661.06590.96540.94650.94940.96070.99521.0205
LVGI 0.75170.71790.81481.41.29441.40351.53490.88060.93150.9878
TATA 0.17060.14510.06730.16080.11540.1380.11090.0208-0.0356-0.0041
M-score -1.37-1.77-2.17-1.72-1.97-1.65-2.00-2.47-2.74-2.62
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