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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.
Capella Education Co has a M-score of -2.29 suggests that the company is not a manipulator.
During the past 13 years, the highest Beneish M-Score of Capella Education Co was -2.29. The lowest was -4.27. And the median was -3.27.
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 Capella Education Co 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 * 1.045||+||0.528 * 0.9612||+||0.404 * 2.6627||+||0.892 * 1.0069||+||0.115 * 1.0207|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0435||+||4.679 * -0.1111||-||0.327 * 0.9356|
* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.
|This Year (Sep14) TTM:||Last Year (Sep13) TTM:|
|Accounts Receivable was $17.0 Mil.|
Revenue was 103.097 + 104.832 + 105.596 + 105.985 = $419.5 Mil.
Gross Profit was 55.954 + 59.302 + 58.296 + 60.079 = $233.6 Mil.
Total Current Assets was $157.6 Mil.
Total Assets was $249.5 Mil.
Property, Plant and Equipment(Net PPE) was $37.7 Mil.
Depreciation, Depletion and Amortization(DDA) was $24.2 Mil.
Selling, General & Admin. Expense(SGA) was $173.1 Mil.
Total Current Liabilities was $51.0 Mil.
Long-Term Debt was $0.0 Mil.
Net Income was 7.757 + 9.044 + 8.817 + 10.016 = $35.6 Mil.
Non Operating Income was -0.046 + -0.171 + -0.342 + 0.284 = $-0.3 Mil.
Cash Flow from Operations was 13.624 + 18.365 + 15.484 + 16.161 = $63.6 Mil.
|Accounts Receivable was $16.2 Mil.
Revenue was 100.703 + 103.693 + 105.242 + 107.001 = $416.6 Mil.
Gross Profit was 54.719 + 58.793 + 58.275 + 51.244 = $223.0 Mil.
Total Current Assets was $185.3 Mil.
Total Assets was $246.6 Mil.
Property, Plant and Equipment(Net PPE) was $41.1 Mil.
Depreciation, Depletion and Amortization(DDA) was $27.3 Mil.
Selling, General & Admin. Expense(SGA) was $164.8 Mil.
Total Current Liabilities was $53.8 Mil.
Long-Term Debt was $0.0 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)|
|=||(17.006 / 419.51)||/||(16.163 / 416.639)|
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)|
|=||(59.302 / 416.639)||/||(55.954 / 419.51)|
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 - (157.557 + 37.728) / 249.489)||/||(1 - (185.332 + 41.114) / 246.564)|
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))|
|=||(27.251 / (27.251 + 41.114))||/||(24.176 / (24.176 + 37.728))|
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)|
|=||(173.121 / 419.51)||/||(164.774 / 416.639)|
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)|
|=||((0 + 50.965) / 249.489)||/||((0 + 53.834) / 246.564)|
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|
|=||(35.634 - -0.275||-||63.634)||/||249.489|
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.
Capella Education Co has a M-score of -2.29 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
Capella Education Co Annual Data
Capella Education Co Quarterly Data