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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 -2.37 suggests that the company is not a manipulator.
During the past 13 years, the highest Beneish M-Score of Capella Education Co was -2.37. The lowest was -4.29. 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 * 0.9792||+||0.528 * 0.9649||+||0.404 * 2.5899||+||0.892 * 1.0045||+||0.115 * 1.051|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0393||+||4.679 * -0.1109||-||0.327 * 0.9324|
|This Year (Jun14) TTM:||Last Year (Jun13) TTM:|
|Accounts Receivable was $14.6 Mil.|
Revenue was 104.832 + 105.596 + 105.985 + 100.703 = $417.1 Mil.
Gross Profit was 59.302 + 58.296 + 60.079 + 54.719 = $232.4 Mil.
Total Current Assets was $151.5 Mil.
Total Assets was $246.1 Mil.
Property, Plant and Equipment(Net PPE) was $39.2 Mil.
Depreciation, Depletion and Amortization(DDA) was $24.3 Mil.
Selling, General & Admin. Expense(SGA) was $174.6 Mil.
Total Current Liabilities was $49.9 Mil.
Long-Term Debt was $0.0 Mil.
Net Income was 9.044 + 8.817 + 10.016 + 6.01 = $33.9 Mil.
Non Operating Income was -0.171 + -0.342 + 0.284 + -0.238 = $-0.5 Mil.
Cash Flow from Operations was 18.365 + 15.484 + 16.161 + 11.632 = $61.6 Mil.
|Accounts Receivable was $14.9 Mil.
Revenue was 103.693 + 105.242 + 107.001 + 99.309 = $415.2 Mil.
Gross Profit was 58.793 + 58.275 + 51.244 + 54.911 = $223.2 Mil.
Total Current Assets was $174.8 Mil.
Total Assets was $237.7 Mil.
Property, Plant and Equipment(Net PPE) was $42.3 Mil.
Depreciation, Depletion and Amortization(DDA) was $28.4 Mil.
Selling, General & Admin. Expense(SGA) was $167.2 Mil.
Total Current Liabilities was $51.7 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)|
|=||(14.617 / 417.116)||/||(14.861 / 415.245)|
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)|
|=||(58.296 / 415.245)||/||(59.302 / 417.116)|
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 - (151.542 + 39.249) / 246.063)||/||(1 - (174.844 + 42.269) / 237.732)|
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))|
|=||(28.448 / (28.448 + 42.269))||/||(24.337 / (24.337 + 39.249))|
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)|
|=||(174.552 / 417.116)||/||(167.193 / 415.245)|
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 + 49.918) / 246.063)||/||((0 + 51.727) / 237.732)|
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|
|=||(33.887 - -0.467||-||61.642)||/||246.063|
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 -2.37 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