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Capital One Financial Corp (NYSE:COF)
Beneish M-Score
-2.52 (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.

Capital One Financial Corp has a M-score of -2.52 suggests that the company is not a manipulator.

COF' s Beneish M-Score Range Over the Past 10 Years
Min: -3.77   Max: 8.93
Current: -2.52

-3.77
8.93

During the past 13 years, the highest Beneish M-Score of Capital One Financial Corp was 8.93. The lowest was -3.77. And the median was -2.50.


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 Capital One Financial Corp 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 * 1.0848+0.528 * 1+0.404 * 1.0011+0.892 * 1.0789+0.115 * 0.9093
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9652+4.679 * -0.0246-0.327 * 1.2141
=-2.52

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

This Year (Jun16) TTM:Last Year (Jun15) TTM:
Accounts Receivable was $1,236 Mil.
Revenue was 6254 + 6220 + 6194 + 5900 = $24,568 Mil.
Gross Profit was 6254 + 6220 + 6194 + 5900 = $24,568 Mil.
Total Current Assets was $0 Mil.
Total Assets was $339,117 Mil.
Property, Plant and Equipment(Net PPE) was $3,556 Mil.
Depreciation, Depletion and Amortization(DDA) was $2,295 Mil.
Selling, General & Admin. Expense(SGA) was $8,728 Mil.
Total Current Liabilities was $0 Mil.
Long-Term Debt was $58,182 Mil.
Net Income was 942 + 1013 + 920 + 1114 = $3,989 Mil.
Non Operating Income was 0 + 0 + 0 + 0 = $0 Mil.
Cash Flow from Operations was 2466 + 4102 + 1122 + 4657 = $12,347 Mil.
Accounts Receivable was $1,056 Mil.
Revenue was 5672 + 5647 + 5813 + 5639 = $22,771 Mil.
Gross Profit was 5672 + 5647 + 5813 + 5639 = $22,771 Mil.
Total Current Assets was $0 Mil.
Total Assets was $310,510 Mil.
Property, Plant and Equipment(Net PPE) was $3,602 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,997 Mil.
Selling, General & Admin. Expense(SGA) was $8,381 Mil.
Total Current Liabilities was $0 Mil.
Long-Term Debt was $43,878 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)
=(1236 / 24568) / (1056 / 22771)
=0.05030935 / 0.04637477
=1.0848

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)
=(22771 / 22771) / (24568 / 24568)
=1 / 1
=1

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 - (0 + 3556) / 339117) / (1 - (0 + 3602) / 310510)
=0.98951394 / 0.98839973
=1.0011

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
=24568 / 22771
=1.0789

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))
=(1997 / (1997 + 3602)) / (2295 / (2295 + 3556))
=0.35667083 / 0.39224064
=0.9093

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)
=(8728 / 24568) / (8381 / 22771)
=0.35525887 / 0.36805586
=0.9652

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)
=((58182 + 0) / 339117) / ((43878 + 0) / 310510)
=0.1715691 / 0.14130946
=1.2141

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
=(3989 - 0 - 12347) / 339117
=-0.0246

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.

Capital One Financial Corp has a M-score of -2.52 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.

Capital One Financial Corp Annual Data

Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15
DSRI 0.82070.85241.19821.20250.01338.66251.25250.80010.76411.0491
GMI 1111111111
AQI 0.99870.99941.00130.99781.00221.00061.00190.99851.0011.0012
SGI 1.20461.2060.95260.93451.24561.00671.31431.04620.99581.0504
DEPI 1.33310.86640.99031.1521.2620.90960.50930.9770.99360.9528
SGAI 0.97320.89051.12160.96741.08931.20020.75171.20681.00511.0228
LVGI 0.90360.94420.41830.71222.50881.15470.8410.86061.15361.1272
TATA -0.0064-0.076-0.0213-0.0071-0.0273-0.0209-0.0193-0.0197-0.0158-0.0182
M-score -2.42-2.77-2.27-2.27-3.774.38-2.02-2.71-2.83-2.53

Capital One Financial Corp Quarterly Data

Mar14Jun14Sep14Dec14Mar15Jun15Sep15Dec15Mar16Jun16
DSRI 0.95331.03890.9920.76410.80050.69370.83021.04911.06561.0848
GMI 1111111111
AQI 0.99931.00011.00061.0011.00111.0011.00091.00121.00131.0011
SGI 1.00870.97510.98030.99581.01641.03351.04591.05041.06291.0789
DEPI 0.93661.13151.08950.99361.06220.95030.9540.95280.90770.9093
SGAI 1.20181.26671.29720.96520.99131.03771.03441.04651.03860.9652
LVGI 0.80591.06961.2781.15361.33121.13671.00121.12721.14621.2141
TATA -0.0226-0.019-0.0165-0.0158-0.0121-0.0149-0.0207-0.0182-0.0252-0.0246
M-score -2.60-2.61-2.71-2.82-2.80-2.86-2.70-2.53-2.55-2.52
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