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ITT Educational Services Inc (NYSE:ESI)
Beneish M-Score
-3.13 (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 -3.13 suggests that the company is not a manipulator.

ESI' s Beneish M-Score Range Over the Past 10 Years
Min: -4.46   Max: -0.21
Current: -3.13

-4.46
-0.21

During the past 13 years, the highest Beneish M-Score of ITT Educational Services Inc was -0.21. The lowest was -4.46. And the median was -3.00.


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 * 0.6915+0.528 * 0.9563+0.404 * 1.3562+0.892 * 0.9035+0.115 * 0.9665
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.8338+4.679 * -0.0971-0.327 * 0.9257
=-3.13

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

This Year (Sep15) TTM:Last Year (Sep14) TTM:
Accounts Receivable was $42.8 Mil.
Revenue was 203.178 + 214.231 + 229.975 + 243.203 = $890.6 Mil.
Gross Profit was 109.904 + 112.366 + 126.422 + 136.351 = $485.0 Mil.
Total Current Assets was $292.3 Mil.
Total Assets was $728.5 Mil.
Property, Plant and Equipment(Net PPE) was $148.6 Mil.
Depreciation, Depletion and Amortization(DDA) was $24.8 Mil.
Selling, General & Admin. Expense(SGA) was $385.1 Mil.
Total Current Liabilities was $393.8 Mil.
Long-Term Debt was $118.9 Mil.
Net Income was 1.688 + 0.716 + 10.447 + 14.917 = $27.8 Mil.
Non Operating Income was 0 + 0 + 0 + 0 = $0.0 Mil.
Cash Flow from Operations was 21.292 + -1.506 + 33.533 + 45.174 = $98.5 Mil.
Accounts Receivable was $68.6 Mil.
Revenue was 242.561 + 238.096 + 237.923 + 267.173 = $985.8 Mil.
Gross Profit was 125.022 + 121.82 + 117.808 + 148.741 = $513.4 Mil.
Total Current Assets was $388.7 Mil.
Total Assets was $767.5 Mil.
Property, Plant and Equipment(Net PPE) was $155.5 Mil.
Depreciation, Depletion and Amortization(DDA) was $24.9 Mil.
Selling, General & Admin. Expense(SGA) was $511.2 Mil.
Total Current Liabilities was $437.7 Mil.
Long-Term Debt was $145.9 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)
=(42.848 / 890.587) / (68.587 / 985.753)
=0.04811209 / 0.06957828
=0.6915

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)
=(112.366 / 985.753) / (109.904 / 890.587)
=0.52081099 / 0.54463292
=0.9563

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 - (292.303 + 148.606) / 728.471) / (1 - (388.658 + 155.459) / 767.506)
=0.39474735 / 0.29105831
=1.3562

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
=890.587 / 985.753
=0.9035

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))
=(24.943 / (24.943 + 155.459)) / (24.807 / (24.807 + 148.606))
=0.13826343 / 0.14305156
=0.9665

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)
=(385.089 / 890.587) / (511.199 / 985.753)
=0.43239908 / 0.51858731
=0.8338

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)
=((118.872 + 393.842) / 728.471) / ((145.88 + 437.669) / 767.506)
=0.70382212 / 0.76031849
=0.9257

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
=(27.768 - 0 - 98.493) / 728.471
=-0.0971

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 -3.13 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

Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14
DSRI 1.20440.6081.40791.68532.20790.66680.74281.91271.51310.5196
GMI 0.9880.98810.90040.94460.94390.99381.05041.08541.06431.049
AQI 1.06951.16591.26690.24972.81071.88461.05631.49531.72671.5895
SGI 1.11361.10141.14751.16771.29931.21020.93950.85780.83340.8969
DEPI 1.27120.96420.96621.11921.04110.94910.97860.90910.96160.9657
SGAI 0.99381.03411.0660.97490.95690.96651.05171.33261.18240.9522
LVGI 0.89721.82951.05350.83411.03461.06390.90551.01830.97681.0831
TATA -0.073-0.0817-0.04940.0469-0.0016-0.2733-0.10990.0464-0.039-0.1657
M-score -2.44-3.35-2.18-1.74-0.41-3.54-3.22-1.38-2.04-3.55

ITT Educational Services Inc Quarterly Data

Jun13Sep13Dec13Mar14Jun14Sep14Dec14Mar15Jun15Sep15
DSRI 2.01111.6391.51310.87510.63590.62990.51960.64170.70710.6915
GMI 1.08251.08531.06431.081.06651.06041.0490.99110.97860.9563
AQI 1.51151.4651.72671.19331.1611.30391.58951.43041.52441.3562
SGI 0.83430.82320.83340.83180.86090.88750.89690.93040.92740.9035
DEPI 0.92260.95120.96160.98751.00171.00430.96570.95130.95370.9665
SGAI 1.36021.35941.18241.17321.17881.18360.95220.90630.87760.8338
LVGI 1.05191.12790.97680.82690.86091.00411.08311.08471.04790.9257
TATA 0.0446-0.0396-0.039-0.2116-0.2541-0.2537-0.1657-0.1547-0.1273-0.0971
M-score -1.33-2.11-2.04-3.59-4.01-3.99-3.55-3.44-3.21-3.13
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