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CA Inc (NAS:CA)
Beneish M-Score
-2.70 (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.

CA Inc has a M-score of -2.70 suggests that the company is not a manipulator.

CA' s 10-Year Beneish M-Score Range
Min: -3.5   Max: -2
Current: -2.7

-3.5
-2

During the past 13 years, the highest Beneish M-Score of CA Inc was -2.00. The lowest was -3.50. And the median was -2.69.


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 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 * 0.8279+0.528 * 1.0022+0.404 * 1.03+0.892 * 0.966+0.115 * 0.9509
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9924+4.679 * -0.0171-0.327 * 0.8865
=-2.70

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.

This Year (Mar15) TTM:Last Year (Mar14) TTM:
Accounts Receivable was $591 Mil.
Revenue was 1023 + 1091 + 1079 + 1069 = $4,262 Mil.
Gross Profit was 858 + 933 + 920 + 916 = $3,627 Mil.
Total Current Assets was $3,987 Mil.
Total Assets was $10,979 Mil.
Property, Plant and Equipment(Net PPE) was $252 Mil.
Depreciation, Depletion and Amortization(DDA) was $402 Mil.
Selling, General & Admin. Expense(SGA) was $1,437 Mil.
Total Current Liabilities was $2,938 Mil.
Long-Term Debt was $1,253 Mil.
Net Income was 151 + 222 + 256 + 217 = $846 Mil.
Non Operating Income was 76 + -24 + 0 + 0 = $52 Mil.
Cash Flow from Operations was 437 + 336 + 35 + 174 = $982 Mil.
Accounts Receivable was $739 Mil.
Revenue was 1084 + 1128 + 1105 + 1095 = $4,412 Mil.
Gross Profit was 915 + 963 + 946 + 939 = $3,763 Mil.
Total Current Assets was $4,559 Mil.
Total Assets was $12,016 Mil.
Property, Plant and Equipment(Net PPE) was $295 Mil.
Depreciation, Depletion and Amortization(DDA) was $415 Mil.
Selling, General & Admin. Expense(SGA) was $1,499 Mil.
Total Current Liabilities was $3,922 Mil.
Long-Term Debt was $1,252 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)
=(591 / 4262) / (739 / 4412)
=0.13866729 / 0.16749773
=0.8279

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)
=(933 / 4412) / (858 / 4262)
=0.85290118 / 0.85100892
=1.0022

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 - (3987 + 252) / 10979) / (1 - (4559 + 295) / 12016)
=0.61389926 / 0.59603862
=1.03

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
=4262 / 4412
=0.966

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))
=(415 / (415 + 295)) / (402 / (402 + 252))
=0.58450704 / 0.6146789
=0.9509

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)
=(1437 / 4262) / (1499 / 4412)
=0.33716565 / 0.33975521
=0.9924

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)
=((1253 + 2938) / 10979) / ((1252 + 3922) / 12016)
=0.38172875 / 0.43059254
=0.8865

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
=(846 - 52 - 982) / 10979
=-0.0171

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 -2.70 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 own currency.

CA Inc Annual Data

Mar06Mar07Mar08Mar09Mar10Mar11Mar12Mar13Mar14Mar15
DSRI 0.67571.67580.92480.86620.98270.96140.98050.99540.92470.8279
GMI 1.08111.01430.99961.03220.94261.01241.00281.00511.01071.0022
AQI 1.17140.90630.93821.02391.05880.97821.04020.97980.95451.03
SGI 1.05271.04531.08470.99860.98971.04781.08690.95760.9570.966
DEPI 1.00460.92661.45630.85951.05230.8450.91150.84311.03390.9509
SGAI 1.06020.97760.90990.88911.0020.99630.98310.94410.93340.9924
LVGI 0.95881.16240.96780.85110.91380.97541.00140.97051.05660.8865
TATA -0.1175-0.0836-0.0508-0.0371-0.0495-0.0446-0.0439-0.0372-0.0082-0.0124
M-score -3.17-2.30-2.66-2.70-2.71-2.69-2.62-2.70-2.64-2.68

CA Inc Quarterly Data

Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14Dec14Mar15
DSRI 0.97490.99541.1161.0250.83430.92470.98580.78041.09120.8279
GMI 1.00591.00511.00651.00841.00791.01071.00891.00771.00451.0022
AQI 0.96990.97980.98180.93440.96570.95450.92630.94841.00711.03
SGI 0.98440.95760.95080.95050.950.9570.96180.96610.97230.966
DEPI 0.91510.84310.86430.89790.89121.03391.04391.01031.02970.9509
SGAI 0.96750.94410.93230.91850.90290.93340.94610.98891.0140.9924
LVGI 1.0270.97050.97981.00651.01691.05661.07871.0020.92720.8865
TATA -0.0574-0.0355-0.0135-0.01320.0023-0.0122-0.0367-0.0317-0.0289-0.0171
M-score -2.81-2.69-2.48-2.58-2.68-2.66-2.74-2.87-2.53-2.70
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