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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 -2.26. The lowest was -4.35. And the median was -3.23.
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 * 1.0802||+||0.528 * 0.9888||+||0.404 * 1.1012||+||0.892 * 1.0276||+||0.115 * 1.0208|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9708||+||4.679 * -0.118||-||0.327 * 1.0566|
|This Year (Jun15) TTM:||Last Year (Jun14) TTM:|
|Accounts Receivable was $16.2 Mil.|
Revenue was 108.007 + 109.074 + 108.442 + 103.097 = $428.6 Mil.
Gross Profit was 60.638 + 62.013 + 62.912 + 55.954 = $241.5 Mil.
Total Current Assets was $162.7 Mil.
Total Assets was $267.0 Mil.
Property, Plant and Equipment(Net PPE) was $38.3 Mil.
Depreciation, Depletion and Amortization(DDA) was $23.0 Mil.
Selling, General & Admin. Expense(SGA) was $174.1 Mil.
Total Current Liabilities was $57.2 Mil.
Long-Term Debt was $0.0 Mil.
Net Income was 10.331 + 10.037 + 12.325 + 7.757 = $40.5 Mil.
Non Operating Income was 0.054 + -0.146 + -0.166 + -0.046 = $-0.3 Mil.
Cash Flow from Operations was 21.354 + 19.563 + 17.715 + 13.624 = $72.3 Mil.
|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.
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)|
|=||(16.224 / 428.62)||/||(14.617 / 417.116)|
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)|
|=||(62.013 / 417.116)||/||(60.638 / 428.62)|
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 - (162.65 + 38.3) / 266.99)||/||(1 - (151.542 + 39.249) / 246.063)|
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))|
|=||(24.337 / (24.337 + 39.249))||/||(22.975 / (22.975 + 38.3))|
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)|
|=||(174.134 / 428.62)||/||(174.552 / 417.116)|
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 + 57.229) / 266.99)||/||((0 + 49.918) / 246.063)|
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|
|=||(40.45 - -0.304||-||72.256)||/||266.99|
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 -2.91 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