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Educational Development Corp (NAS:EDUC)
Beneish M-Score
-2.88 (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.

Educational Development Corp has a M-score of -2.88 suggests that the company is not a manipulator.

EDUC' s 10-Year Beneish M-Score Range
Min: -10000000   Max: -1.25
Current: -2.88

-10000000
-1.25

During the past 13 years, the highest Beneish M-Score of Educational Development Corp was -1.25. The lowest was -10000000.00. And the median was -2.57.


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 Educational Development 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 * 0.9233+0.528 * 0.9623+0.404 * 0.5211+0.892 * 1.0965+0.115 * 1.0105
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.995+4.679 * -0.0208-0.327 * 1.3398
=-2.88

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

This Year (May14) TTM:Last Year (May13) TTM:
Accounts Receivable was $3.52 Mil.
Revenue was 7.178 + 5.889 + 8.502 + 5.715 = $27.28 Mil.
Gross Profit was 4.335 + 3.798 + 5.208 + 3.054 = $16.40 Mil.
Total Current Assets was $15.24 Mil.
Total Assets was $17.88 Mil.
Property, Plant and Equipment(Net PPE) was $1.93 Mil.
Depreciation, Depletion and Amortization(DDA) was $0.12 Mil.
Selling, General & Admin. Expense(SGA) was $14.86 Mil.
Total Current Liabilities was $5.34 Mil.
Long-Term Debt was $0.00 Mil.
Net Income was 0.24 + -0.313 + 0.548 + 0.056 = $0.53 Mil.
Non Operating Income was 0.004 + -0.391 + 0.006 + 0.002 = $-0.38 Mil.
Cash Flow from Operations was -0.484 + 1.012 + 1.293 + -0.539 = $1.28 Mil.
Accounts Receivable was $3.47 Mil.
Revenue was 5.991 + 5.564 + 7.864 + 5.464 = $24.88 Mil.
Gross Profit was 3.514 + 3.037 + 4.813 + 3.024 = $14.39 Mil.
Total Current Assets was $13.85 Mil.
Total Assets was $17.04 Mil.
Property, Plant and Equipment(Net PPE) was $1.90 Mil.
Depreciation, Depletion and Amortization(DDA) was $0.11 Mil.
Selling, General & Admin. Expense(SGA) was $13.62 Mil.
Total Current Liabilities was $3.80 Mil.
Long-Term Debt was $0.00 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)
=(3.515 / 27.284) / (3.472 / 24.883)
=0.12883008 / 0.13953301
=0.9233

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)
=(3.798 / 24.883) / (4.335 / 27.284)
=0.5782261 / 0.60090163
=0.9623

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 - (15.241 + 1.934) / 17.882) / (1 - (13.852 + 1.896) / 17.041)
=0.03953696 / 0.07587583
=0.5211

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
=27.284 / 24.883
=1.0965

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))
=(0.114 / (0.114 + 1.896)) / (0.115 / (0.115 + 1.934))
=0.05671642 / 0.05612494
=1.0105

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)
=(14.859 / 27.284) / (13.62 / 24.883)
=0.5446049 / 0.54736165
=0.995

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 + 5.341) / 17.882) / ((0 + 3.799) / 17.041)
=0.29868024 / 0.22293293
=1.3398

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
=(0.531 - -0.379 - 1.282) / 17.882
=-0.0208

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.

Educational Development Corp has a M-score of -2.88 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.

Educational Development Corp Annual Data

Feb05Feb06Feb07Feb08Feb09Feb10Feb11Feb12Feb13Feb14
DSRI 1.1261.0771.06970.9421.2931.04460.97681.20511.05180.8034
GMI 0.99281.01310.98830.98951.0121.01211.0161.04011.01740.9857
AQI 1.33280.54951.23360.80941.3611.35161.05131.33691.14260.6524
SGI 1.01681.00440.98790.97190.96320.97530.95020.96440.97011.0239
DEPI 1.5230.95020.92081.03310.95190.96571.03941.03540.99210.9732
SGAI 1.00630.98831.03061.00321.0150.98341.040.93421.04811.0162
LVGI 1.27670.84550.74590.79411.24581.00251.06370.97361.17981.0027
TATA -0.09820.0503-0.0233-0.0182-0.09640.0711-0.09480.03030.0061-0.1211
M-score -2.71-2.30-2.38-2.66-2.63-1.98-2.98-2.00-2.43-3.36

Educational Development Corp Quarterly Data

Feb12May12Aug12Nov12Feb13May13Aug13Nov13Feb14May14
DSRI 1.20521.02761.1291.06521.05181.12281.09421.03340.80340.9233
GMI 1.041.02571.01791.00121.01751.04141.04781.04750.98570.9623
AQI 1.33691.50191.47251.26781.14261.1731.07040.87380.65240.5211
SGI 0.96440.97760.990.98850.97010.93530.94380.99881.02391.0965
DEPI 1.03541.0431.01351.01350.99210.98841.00521.00740.97321.0105
SGAI 0.93430.94480.94830.98211.04811.05921.06531.04251.01610.995
LVGI 0.97361.0451.22441.06921.17980.93471.00841.06921.00271.3398
TATA 0.03030.00040.02590.02490.0061-0.0092-0.0308-0.0611-0.1211-0.0208
M-score -2.00-2.26-2.11-2.22-2.43-2.37-2.55-2.79-3.36-2.88
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