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CA Inc (NAS:CA)
Beneish M-Score
-2.44 (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 -2.44 suggests that the company is not a manipulator.

CA' s 10-Year Beneish M-Score Range
Min: -3.94   Max: -1.18
Current: -2.44

-3.94
-1.18

During the past 13 years, the highest Beneish M-Score of CA Inc was -1.18. The lowest was -3.94. 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 * 1.0658+0.528 * 1.0023+0.404 * 1.0071+0.892 * 0.9955+0.115 * 1.0188
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0213+4.679 * -0.0083-0.327 * 0.9272
=-2.44

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

This Year (Dec14) TTM:Last Year (Dec13) TTM:
Accounts Receivable was $661 Mil.
Revenue was 1091 + 1079 + 1069 + 1187 = $4,426 Mil.
Gross Profit was 933 + 920 + 916 + 1011 = $3,780 Mil.
Total Current Assets was $3,840 Mil.
Total Assets was $10,915 Mil.
Property, Plant and Equipment(Net PPE) was $264 Mil.
Depreciation, Depletion and Amortization(DDA) was $412 Mil.
Selling, General & Admin. Expense(SGA) was $1,521 Mil.
Total Current Liabilities was $2,864 Mil.
Long-Term Debt was $1,252 Mil.
Net Income was 222 + 256 + 217 + 107 = $802 Mil.
Non Operating Income was -24 + 0 + 0 + -130 = $-154 Mil.
Cash Flow from Operations was 336 + 35 + 174 + 502 = $1,047 Mil.
Accounts Receivable was $623 Mil.
Revenue was 1128 + 1105 + 1095 + 1118 = $4,446 Mil.
Gross Profit was 963 + 946 + 939 + 958 = $3,806 Mil.
Total Current Assets was $4,190 Mil.
Total Assets was $11,777 Mil.
Property, Plant and Equipment(Net PPE) was $290 Mil.
Depreciation, Depletion and Amortization(DDA) was $475 Mil.
Selling, General & Admin. Expense(SGA) was $1,496 Mil.
Total Current Liabilities was $3,537 Mil.
Long-Term Debt was $1,253 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)
=(661 / 4426) / (623 / 4446)
=0.14934478 / 0.14012596
=1.0658

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)
=(920 / 4446) / (933 / 4426)
=0.85605038 / 0.85404428
=1.0023

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 - (3840 + 264) / 10915) / (1 - (4190 + 290) / 11777)
=0.62400366 / 0.61959752
=1.0071

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
=4426 / 4446
=0.9955

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))
=(475 / (475 + 290)) / (412 / (412 + 264))
=0.62091503 / 0.60946746
=1.0188

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)
=(1521 / 4426) / (1496 / 4446)
=0.34365115 / 0.33648223
=1.0213

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)
=((1252 + 2864) / 10915) / ((1253 + 3537) / 11777)
=0.37709574 / 0.40672497
=0.9272

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
=(802 - -154 - 1047) / 10915
=-0.0083

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 -2.44 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

Mar05Mar06Mar07Mar08Mar09Mar10Mar11Mar12Mar13Mar14
DSRI 0.7470.67571.67580.92480.86620.98270.96140.98050.99540.955
GMI 0.99411.08111.01430.99961.03220.94261.01241.00281.00511.0086
AQI 0.92991.17140.90630.93821.02391.05880.97821.04020.97980.9545
SGI 1.07531.05271.04531.08470.99860.98971.04781.08690.95760.9794
DEPI 1.00211.00460.92661.45630.85951.05230.8450.91150.84311.0228
SGAI 0.98511.06020.97760.90990.88911.0020.99630.98310.94410.9401
LVGI 1.14760.95881.16240.96780.85110.91380.97541.00140.97051.0566
TATA -0.1118-0.1175-0.0836-0.0508-0.0371-0.0495-0.0446-0.0439-0.03720.0104
M-score -3.25-3.17-2.30-2.66-2.70-2.71-2.69-2.62-2.70-2.51

CA Inc Quarterly Data

Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14Dec14
DSRI 0.98980.97490.99541.1161.0250.83430.9550.96320.76241.0658
GMI 1.0011.00591.00511.00651.00841.00791.00861.00681.00551.0023
AQI 0.99430.96990.97980.98180.93440.96570.95450.92630.94841.0071
SGI 1.02440.98440.95760.95080.95050.950.97940.98440.98890.9955
DEPI 0.91290.91510.84310.86430.89790.89121.02281.03270.99991.0188
SGAI 0.94470.96750.94410.93230.91850.90290.94010.95320.99621.0213
LVGI 1.04691.0270.97050.97981.00651.01691.05661.07871.0020.9272
TATA -0.0429-0.0574-0.0355-0.0135-0.01320.00230.0064-0.0175-0.012-0.0083
M-score -2.69-2.81-2.69-2.48-2.58-2.68-2.53-2.65-2.78-2.44
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