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Capital One Financial Corp (NYSE:COF)
Beneish M-Score
-2.54 (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 -2.54 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: -2.54

-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 -2.47.


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 * 1.0656+0.528 * 1+0.404 * 1.0013+0.892 * 1.0629+0.115 * 0.9077
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0154+4.679 * -0.0252-0.327 * 1.1462
=-2.54

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

This Year (Mar16) TTM:Last Year (Mar15) TTM:
Accounts Receivable was $1,221 Mil.
Revenue was 6220 + 6194 + 5900 + 5672 = $23,986 Mil.
Gross Profit was 6220 + 6194 + 5900 + 5672 = $23,986 Mil.
Total Current Assets was $0 Mil.
Total Assets was $330,346 Mil.
Property, Plant and Equipment(Net PPE) was $3,542 Mil.
Depreciation, Depletion and Amortization(DDA) was $2,208 Mil.
Selling, General & Admin. Expense(SGA) was $8,521 Mil.
Total Current Liabilities was $0 Mil.
Long-Term Debt was $49,580 Mil.
Net Income was 1013 + 920 + 1114 + 863 = $3,910 Mil.
Non Operating Income was 0 + 0 + 0 + 0 = $0 Mil.
Cash Flow from Operations was 4102 + 1122 + 4657 + 2355 = $12,236 Mil.
Accounts Receivable was $1,078 Mil.
Revenue was 5647 + 5813 + 5639 + 5468 = $22,567 Mil.
Gross Profit was 5647 + 5813 + 5639 + 5468 = $22,567 Mil.
Total Current Assets was $0 Mil.
Total Assets was $306,224 Mil.
Property, Plant and Equipment(Net PPE) was $3,684 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,971 Mil.
Selling, General & Admin. Expense(SGA) was $7,895 Mil.
Total Current Liabilities was $0 Mil.
Long-Term Debt was $40,096 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)
=(1221 / 23986) / (1078 / 22567)
=0.05090469 / 0.04776887
=1.0656

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)
=(22567 / 22567) / (23986 / 23986)
=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 + 3542) / 330346) / (1 - (0 + 3684) / 306224)
=0.98927791 / 0.98796959
=1.0013

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
=23986 / 22567
=1.0629

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))
=(1971 / (1971 + 3684)) / (2208 / (2208 + 3542))
=0.34854111 / 0.384
=0.9077

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)
=(8521 / 23986) / (7895 / 22567)
=0.3552489 / 0.34984712
=1.0154

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)
=((49580 + 0) / 330346) / ((40096 + 0) / 306224)
=0.15008506 / 0.13093683
=1.1462

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
=(3910 - 0 - 12236) / 330346
=-0.0252

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 -2.54 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 0.82040.85271.19821.20250.01338.66251.25250.80010.76411.0491
GMI 1111111111
AQI 0.99870.99941.00130.99781.00221.00061.00190.99851.0011.0012
SGI 1.2051.20570.95260.93451.24551.00671.31431.04620.99581.0504
DEPI 1.33310.86640.99031.15251.14280.9750.52440.9770.99360.9528
SGAI 0.97690.88710.92021.17930.89541.17960.93031.20681.00511.0228
LVGI 0.90360.94420.41830.71222.50881.15470.8410.86061.15361.1272
TATA -0.0064-0.076-0.0213-0.0113-0.0273-0.0209-0.0193-0.0197-0.0158-0.0182
M-score -2.42-2.77-2.24-2.33-3.754.39-2.05-2.71-2.83-2.53

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 0.93661.13151.08950.99361.06220.95030.9540.95280.90771.0716
SGAI 1.20181.26671.29720.96520.99131.01361.01081.02281.01540.9648
LVGI 0.80591.06961.2781.15361.33121.13671.00121.12721.14621.2141
TATA -0.0226-0.019-0.0165-0.0158-0.0121-0.0149-0.0207-0.0182-0.0252-0.0174
M-score -2.60-2.61-2.71-2.82-2.80-2.85-2.70-2.53-2.54-2.47
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