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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 -2.02. The lowest was -3.49. 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 * 1.0141||+||0.528 * 0.9952||+||0.404 * 1.0762||+||0.892 * 0.9444||+||0.115 * 1.0256|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0117||+||4.679 * -0.0202||-||0.327 * 1.1329|
|This Year (Mar16) TTM:||Last Year (Mar15) TTM:|
|Accounts Receivable was $566 Mil.|
Revenue was 1009 + 1034 + 1005 + 977 = $4,025 Mil.
Gross Profit was 859 + 886 + 857 + 840 = $3,442 Mil.
Total Current Assets was $3,561 Mil.
Total Assets was $11,204 Mil.
Property, Plant and Equipment(Net PPE) was $242 Mil.
Depreciation, Depletion and Amortization(DDA) was $362 Mil.
Selling, General & Admin. Expense(SGA) was $1,373 Mil.
Total Current Liabilities was $2,894 Mil.
Long-Term Debt was $1,947 Mil.
Net Income was 174 + 223 + 174 + 212 = $783 Mil.
Non Operating Income was -12 + 0 + -4 + 3 = $-13 Mil.
Cash Flow from Operations was 448 + 336 + 50 + 188 = $1,022 Mil.
|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 $3,986 Mil.
Total Assets was $10,973 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 $1,247 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)|
|=||(566 / 4025)||/||(591 / 4262)|
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)|
|=||(886 / 4262)||/||(859 / 4025)|
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 - (3561 + 242) / 11204)||/||(1 - (3986 + 252) / 10973)|
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))|
|=||(402 / (402 + 252))||/||(362 / (362 + 242))|
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)|
|=||(1373 / 4025)||/||(1437 / 4262)|
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)|
|=||((1947 + 2894) / 11204)||/||((1247 + 2938) / 10973)|
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|
|=||(783 - -13||-||1022)||/||11204|
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 -2.63 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