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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 13 years, the highest Beneish M-Score of Apollo Education Group Inc was -1.59. The lowest was -3.40. And the median was -2.76.
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 Apollo Education 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 * 1.3342||+||0.528 * 1.1076||+||0.404 * 1.0647||+||0.892 * 0.819||+||0.115 * 1.0582|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9133||+||4.679 * -0.0628||-||0.327 * 0.9501|
* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.
|This Year (Aug16) TTM:||Last Year (Aug15) TTM:|
|Accounts Receivable was $210 Mil.|
Revenue was 492.479 + 558.002 + 465.348 + 586.021 = $2,102 Mil.
Gross Profit was 231.777 + 283.516 + 194.708 + 294.694 = $1,005 Mil.
Total Current Assets was $1,089 Mil.
Total Assets was $2,013 Mil.
Property, Plant and Equipment(Net PPE) was $333 Mil.
Depreciation, Depletion and Amortization(DDA) was $110 Mil.
Selling, General & Admin. Expense(SGA) was $726 Mil.
Total Current Liabilities was $715 Mil.
Long-Term Debt was $35 Mil.
Net Income was 15.863 + 20.744 + -60.396 + -60.765 = $-85 Mil.
Non Operating Income was -0.983 + -0.273 + -1.113 + -0.843 = $-3 Mil.
Cash Flow from Operations was 35.451 + -13.45 + 41.95 + -18.867 = $45 Mil.
|Accounts Receivable was $192 Mil.
Revenue was 600.291 + 676.358 + 575.103 + 714.525 = $2,566 Mil.
Gross Profit was 300.104 + 381.517 + 284.17 + 392.951 = $1,359 Mil.
Total Current Assets was $1,223 Mil.
Total Assets was $2,201 Mil.
Property, Plant and Equipment(Net PPE) was $370 Mil.
Depreciation, Depletion and Amortization(DDA) was $132 Mil.
Selling, General & Admin. Expense(SGA) was $971 Mil.
Total Current Liabilities was $832 Mil.
Long-Term Debt was $32 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)|
|=||(209.747 / 2101.85)||/||(191.945 / 2566.277)|
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)|
|=||(1358.742 / 2566.277)||/||(1004.695 / 2101.85)|
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 - (1088.725 + 332.702) / 2012.906)||/||(1 - (1223.3 + 370.281) / 2201.064)|
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))|
|=||(132.012 / (132.012 + 370.281))||/||(109.938 / (109.938 + 332.702))|
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)|
|=||(726.457 / 2101.85)||/||(971.189 / 2566.277)|
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)|
|=||((35.186 + 715.477) / 2012.906)||/||((31.566 + 832.344) / 2201.064)|
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|
|=||(-84.554 - -3.212||-||45.084)||/||2012.906|
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.
Apollo Education Group Inc has a M-score of -2.51 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
Apollo Education Group Inc Annual Data
Apollo Education Group Inc Quarterly Data