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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.
CA Inc has a M-score of -2.77 suggests that the company is not a manipulator.
During the past 13 years, the highest Beneish M-Score of CA Inc was -1.15. The lowest was -4.00. And the median was -2.74.
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 * 0.7915||+||0.528 * 1.0087||+||0.404 * 0.9484||+||0.892 * 0.9525||+||0.115 * 1.0139|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0005||+||4.679 * -0.0077||-||0.327 * 1.002|
|This Year (Sep14) TTM:||Last Year (Sep13) TTM:|
|Accounts Receivable was $429 Mil.|
Revenue was 1079 + 1069 + 1084 + 1163 = $4,395 Mil.
Gross Profit was 920 + 916 + 915 + 996 = $3,747 Mil.
Total Current Assets was $4,231 Mil.
Total Assets was $11,372 Mil.
Property, Plant and Equipment(Net PPE) was $278 Mil.
Depreciation, Depletion and Amortization(DDA) was $421 Mil.
Selling, General & Admin. Expense(SGA) was $1,500 Mil.
Total Current Liabilities was $3,290 Mil.
Long-Term Debt was $1,253 Mil.
Net Income was 256 + 217 + 107 + 232 = $812 Mil.
Non Operating Income was 0 + 0 + -208 + 0 = $-208 Mil.
Cash Flow from Operations was 35 + 174 + 470 + 429 = $1,108 Mil.
|Accounts Receivable was $569 Mil.
Revenue was 1140 + 1128 + 1151 + 1195 = $4,614 Mil.
Gross Profit was 979 + 969 + 989 + 1031 = $3,968 Mil.
Total Current Assets was $3,911 Mil.
Total Assets was $11,595 Mil.
Property, Plant and Equipment(Net PPE) was $306 Mil.
Depreciation, Depletion and Amortization(DDA) was $480 Mil.
Selling, General & Admin. Expense(SGA) was $1,574 Mil.
Total Current Liabilities was $2,855 Mil.
Long-Term Debt was $1,768 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)|
|=||(429 / 4395)||/||(569 / 4614)|
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)|
|=||(916 / 4614)||/||(920 / 4395)|
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 - (4231 + 278) / 11372)||/||(1 - (3911 + 306) / 11595)|
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))|
|=||(480 / (480 + 306))||/||(421 / (421 + 278))|
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)|
|=||(1500 / 4395)||/||(1574 / 4614)|
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 + 3290) / 11372)||/||((1768 + 2855) / 11595)|
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|
|=||(812 - -208||-||1108)||/||11372|
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 -2.77 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