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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 CA Inc was -1.18. The lowest was -3.95. And the median was -2.68.
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 CA 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 * 0.9088||+||0.528 * 0.9933||+||0.404 * 1.0029||+||0.892 * 0.9985||+||0.115 * 1.0048|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9527||+||4.679 * -0.0232||-||0.327 * 0.966|
|This Year (Dec16) TTM:||Last Year (Dec15) TTM:|
|Accounts Receivable was $510 Mil.|
Revenue was 1007 + 1018 + 999 + 1009 = $4,033 Mil.
Gross Profit was 865 + 879 + 856 + 859 = $3,459 Mil.
Total Current Assets was $3,519 Mil.
Total Assets was $11,022 Mil.
Property, Plant and Equipment(Net PPE) was $219 Mil.
Depreciation, Depletion and Amortization(DDA) was $325 Mil.
Selling, General & Admin. Expense(SGA) was $1,347 Mil.
Total Current Liabilities was $2,619 Mil.
Long-Term Debt was $1,946 Mil.
Net Income was 208 + 212 + 198 + 174 = $792 Mil.
Non Operating Income was 17 + -27 + 0 + -10 = $-20 Mil.
Cash Flow from Operations was 517 + -58 + 161 + 448 = $1,068 Mil.
|Accounts Receivable was $562 Mil.
Revenue was 1034 + 1005 + 977 + 1023 = $4,039 Mil.
Gross Profit was 886 + 857 + 840 + 858 = $3,441 Mil.
Total Current Assets was $3,454 Mil.
Total Assets was $10,857 Mil.
Property, Plant and Equipment(Net PPE) was $249 Mil.
Depreciation, Depletion and Amortization(DDA) was $374 Mil.
Selling, General & Admin. Expense(SGA) was $1,416 Mil.
Total Current Liabilities was $2,699 Mil.
Long-Term Debt was $1,956 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)|
|=||(510 / 4033)||/||(562 / 4039)|
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)|
|=||(3441 / 4039)||/||(3459 / 4033)|
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 - (3519 + 219) / 11022)||/||(1 - (3454 + 249) / 10857)|
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))|
|=||(374 / (374 + 249))||/||(325 / (325 + 219))|
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)|
|=||(1347 / 4033)||/||(1416 / 4039)|
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)|
|=||((1946 + 2619) / 11022)||/||((1956 + 2699) / 10857)|
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|
|=||(792 - -20||-||1068)||/||11022|
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.
CA Inc has a M-score of -2.66 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
CA Inc Annual Data
CA Inc Quarterly Data