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ITT Educational Services, Inc. (NYSE:ESI)
Beneish M-Score
0.00 (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 -2.29 suggests that the company is not a manipulator.

ESI' s 10-Year Beneish M-Score Range
Min: 0   Max: 0
Current: 0

During the past 13 years, the highest Beneish M-Score of ITT Educational Services, Inc. was 0.00. The lowest was 0.00. And the median was 0.00.


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 * 1.6343+0.528 * 1.0948+0.404 * 1.0962+0.892 * 0.8179+0.115 * 0.9512
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.3276+4.679 * -0.0667-0.327 * 0.8327
=-2.29

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

This Year (Sep13) TTM:Last Year (Sep12) TTM:
Accounts Receivable was $120 Mil.
Revenue was 259.416 + 259.936 + 287.711 + 300.843 = $1,108 Mil.
Gross Profit was 137.422 + 136.108 + 162.49 + 171.449 = $607 Mil.
Total Current Assets was $334 Mil.
Total Assets was $609 Mil.
Property, Plant and Equipment(Net PPE) was $174 Mil.
Depreciation, Depletion and Amortization(DDA) was $28 Mil.
Selling, General & Admin. Expense(SGA) was $475 Mil.
Total Current Liabilities was $265 Mil.
Long-Term Debt was $60 Mil.
Net Income was 18.941 + 20.859 + 31.13 + -9.468 = $61 Mil.
Non Operating Income was 0 + 0 + 0 + 0 = $0 Mil.
Cash Flow from Operations was 51.317 + 7.607 + -43.418 + 86.587 = $102 Mil.
Accounts Receivable was $89 Mil.
Revenue was 314.747 + 329.825 + 341.794 + 368.263 = $1,355 Mil.
Gross Profit was 180.799 + 188.885 + 206.853 + 236.658 = $813 Mil.
Total Current Assets was $302 Mil.
Total Assets was $585 Mil.
Property, Plant and Equipment(Net PPE) was $194 Mil.
Depreciation, Depletion and Amortization(DDA) was $30 Mil.
Selling, General & Admin. Expense(SGA) was $438 Mil.
Total Current Liabilities was $235 Mil.
Long-Term Debt was $140 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)
=(119.529 / 1107.906) / (89.425 / 1354.629)
=0.10788731 / 0.06601438
=1.6343

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)
=(136.108 / 1354.629) / (137.422 / 1107.906)
=0.60030828 / 0.54830374
=1.0948

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 - (333.501 + 174.394) / 608.961) / (1 - (302.218 + 194.253) / 585.05)
=0.16596465 / 0.15140415
=1.0962

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
=1107.906 / 1354.629
=0.8179

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))
=(29.563 / (29.563 + 194.253)) / (28.121 / (28.121 + 174.394))
=0.13208618 / 0.13885885
=0.9512

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)
=(475.447 / 1107.906) / (437.866 / 1354.629)
=0.4291402 / 0.32323684
=1.3276

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)
=((60 + 265.112) / 608.961) / ((140 + 235.086) / 585.05)
=0.53387984 / 0.64111785
=0.8327

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
=(61.462 - 0 - 102.093) / 608.961
=-0.0667

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 -2.29 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

Dec04Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13
DSRI 0.93921.20440.6081.40791.68532.20790.66680.74281.87281.4539
GMI 0.89930.9880.98810.90040.94460.94390.99381.05041.08641.076
AQI 0.64081.06951.16591.26690.24972.81071.88461.05631.48121.3322
SGI 1.18171.11361.10141.14751.16771.29931.21020.93950.85820.8312
DEPI 1.32291.27120.96420.96621.11921.04110.94910.97860.90910.9616
SGAI 0.9950.99381.03411.0660.97490.95690.96651.05171.30741.1665
LVGI 0.84820.89721.82951.05350.83411.03461.06390.90550.97880.7587
TATA -0.0726-0.073-0.0817-0.04940.0469-0.0016-0.2733-0.10990.0522-0.0254
M-score -2.82-2.44-3.35-2.18-1.74-0.41-3.54-3.22-1.38-2.11

ITT Educational Services, Inc. Quarterly Data

Sep11Dec11Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13
DSRI 0.66670.74280.99551.76891.8131.87282.26252.01131.63431.4539
GMI 1.03981.05041.06081.07261.06431.08641.09161.0871.09481.076
AQI 1.60421.05631.21491.28341.24541.48121.17970.9551.09621.3322
SGI 0.98780.93950.9140.88540.87860.85820.84540.83060.81790.8312
DEPI 0.98070.97860.95920.94180.91050.90910.91560.92260.95120.9616
SGAI 1.03411.05171.09091.1041.1271.30741.33131.3391.32761.1514
LVGI 0.99030.90550.92680.91490.89050.97880.79570.81210.83270.7587
TATA -0.2301-0.10990.06110.1910.19010.05220.13360.0237-0.0667-0.0254
M-score -3.61-3.22-2.15-0.83-0.81-1.38-0.71-1.57-2.29-2.11
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