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ITT Educational Services Inc (NYSE:ESI)
Beneish M-Score
-2.64 (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.

ITT Educational Services Inc has a M-score of -2.64 suggests that the company is not a manipulator.

ESI' s Beneish M-Score Range Over the Past 10 Years
Min: -4.41   Max: -0.21
Current: -2.64

-4.41
-0.21

During the past 13 years, the highest Beneish M-Score of ITT Educational Services Inc was -0.21. The lowest was -4.41. And the median was -2.93.


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 ITT Educational Services Inc 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 * 1.1982+0.528 * 1.0042+0.404 * 1.0877+0.892 * 0.8506+0.115 * 1.0977
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0035+4.679 * -0.0619-0.327 * 0.9038
=-2.64

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

This Year (Mar16) TTM:Last Year (Mar15) TTM:
Accounts Receivable was $47.1 Mil.
Revenue was 191.499 + 202.442 + 203.178 + 214.231 = $811.4 Mil.
Gross Profit was 98.868 + 110.524 + 109.904 + 112.366 = $431.7 Mil.
Total Current Assets was $214.6 Mil.
Total Assets was $622.4 Mil.
Property, Plant and Equipment(Net PPE) was $138.2 Mil.
Depreciation, Depletion and Amortization(DDA) was $21.2 Mil.
Selling, General & Admin. Expense(SGA) was $355.0 Mil.
Total Current Liabilities was $291.6 Mil.
Long-Term Debt was $118.6 Mil.
Net Income was 4.107 + 10.447 + 1.688 + 0.716 = $17.0 Mil.
Non Operating Income was 0 + 0 + 0 + 0 = $0.0 Mil.
Cash Flow from Operations was 12.334 + 23.391 + 21.292 + -1.506 = $55.5 Mil.
Accounts Receivable was $46.2 Mil.
Revenue was 229.975 + 243.203 + 242.561 + 238.096 = $953.8 Mil.
Gross Profit was 126.422 + 136.351 + 125.022 + 121.82 = $509.6 Mil.
Total Current Assets was $292.7 Mil.
Total Assets was $739.2 Mil.
Property, Plant and Equipment(Net PPE) was $152.2 Mil.
Depreciation, Depletion and Amortization(DDA) was $26.0 Mil.
Selling, General & Admin. Expense(SGA) was $415.9 Mil.
Total Current Liabilities was $316.6 Mil.
Long-Term Debt was $222.5 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)
=(47.086 / 811.35) / (46.2 / 953.835)
=0.05803414 / 0.04843605
=1.1982

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)
=(110.524 / 953.835) / (98.868 / 811.35)
=0.53428004 / 0.53202933
=1.0042

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 - (214.565 + 138.242) / 622.391) / (1 - (292.672 + 152.181) / 739.247)
=0.43314251 / 0.39823496
=1.0877

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
=811.35 / 953.835
=0.8506

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))
=(25.975 / (25.975 + 152.181)) / (21.175 / (21.175 + 138.242))
=0.14579919 / 0.13282774
=1.0977

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)
=(355.001 / 811.35) / (415.896 / 953.835)
=0.4375436 / 0.4360251
=1.0035

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)
=((118.611 + 291.592) / 622.391) / ((222.5 + 316.577) / 739.247)
=0.65907605 / 0.72922447
=0.9038

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
=(16.958 - 0 - 55.511) / 622.391
=-0.0619

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.

ITT Educational Services Inc has a M-score of -2.64 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.

ITT Educational Services Inc Annual Data

Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15
DSRI 0.6081.40791.68532.20790.66680.74281.91191.51370.51961.1916
GMI 0.98810.90040.94460.94390.99381.05041.08641.11950.99650.964
AQI 1.16591.26690.24972.81071.88461.05631.49531.72671.60111.0384
SGI 1.10141.14751.16771.29931.21020.93950.85820.83310.89690.8836
DEPI 0.96420.96621.11921.04110.94910.97860.90910.96160.96571.0768
SGAI 1.03411.0660.96730.96450.96651.05171.30741.20520.95220.989
LVGI 1.82951.05350.83411.03461.06390.90551.01830.97681.09880.918
TATA -0.0809-0.04940.0493-0.0016-0.2733-0.10990.052-0.039-0.1649-0.0804
M-score -3.35-2.18-1.73-0.41-3.54-3.22-1.35-2.01-3.57-2.75

ITT Educational Services Inc Quarterly Data

Dec13Mar14Jun14Sep14Dec14Mar15Jun15Sep15Dec15Mar16
DSRI 1.51310.87510.63590.62990.51960.64170.70710.69151.19161.1982
GMI 1.06431.081.06651.06041.0490.99110.97860.95630.9641.0042
AQI 1.72671.20091.17011.31871.60111.42911.51251.3411.03841.0877
SGI 0.83340.83180.86090.88750.89690.93040.92740.90350.88360.8506
DEPI 0.96160.98751.00171.00430.96570.95130.95370.96651.07681.0977
SGAI 1.18241.17321.17881.18360.95220.90630.87760.83380.9891.0035
LVGI 0.97680.83250.86781.01521.09881.09091.03960.91560.9180.9038
TATA -0.039-0.2147-0.2578-0.2598-0.1728-0.1583-0.1309-0.0975-0.0804-0.0619
M-score -2.04-3.60-4.03-4.01-3.58-3.46-3.23-3.14-2.75-2.64
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