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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 Capella Education Co was -2.53. The lowest was -4.24. And the median was -3.05.
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 * 1.0422||+||0.528 * 0.9955||+||0.404 * 1.6729||+||0.892 * 1.0153||+||0.115 * 1.0077|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9871||+||4.679 * -0.1043||-||0.327 * 0.8281|
|This Year (Dec14) TTM:||Last Year (Dec13) TTM:|
|Accounts Receivable was $17.9 Mil.|
Revenue was 108.442 + 103.097 + 104.832 + 105.596 = $422.0 Mil.
Gross Profit was 62.912 + 55.954 + 59.302 + 58.296 = $236.5 Mil.
Total Current Assets was $153.3 Mil.
Total Assets was $254.4 Mil.
Property, Plant and Equipment(Net PPE) was $37.2 Mil.
Depreciation, Depletion and Amortization(DDA) was $23.8 Mil.
Selling, General & Admin. Expense(SGA) was $172.4 Mil.
Total Current Liabilities was $47.3 Mil.
Long-Term Debt was $0.0 Mil.
Net Income was 12.325 + 7.757 + 9.044 + 8.817 = $37.9 Mil.
Non Operating Income was -0.166 + -0.046 + -0.171 + -0.342 = $-0.7 Mil.
Cash Flow from Operations was 17.715 + 13.624 + 18.365 + 15.484 = $65.2 Mil.
|Accounts Receivable was $16.9 Mil.
Revenue was 105.985 + 100.703 + 103.693 + 105.242 = $415.6 Mil.
Gross Profit was 60.079 + 54.719 + 58.793 + 58.275 = $231.9 Mil.
Total Current Assets was $172.8 Mil.
Total Assets was $250.2 Mil.
Property, Plant and Equipment(Net PPE) was $40.0 Mil.
Depreciation, Depletion and Amortization(DDA) was $25.9 Mil.
Selling, General & Admin. Expense(SGA) was $172.0 Mil.
Total Current Liabilities was $56.2 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)|
|=||(17.902 / 421.967)||/||(16.919 / 415.623)|
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)|
|=||(55.954 / 415.623)||/||(62.912 / 421.967)|
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 - (153.34 + 37.246) / 254.357)||/||(1 - (172.752 + 39.993) / 250.249)|
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))|
|=||(25.877 / (25.877 + 39.993))||/||(23.798 / (23.798 + 37.246))|
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)|
|=||(172.369 / 421.967)||/||(171.989 / 415.623)|
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 + 47.291) / 254.357)||/||((0 + 56.185) / 250.249)|
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|
|=||(37.943 - -0.725||-||65.188)||/||254.357|
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 -2.59 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