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ITT Educational Services Inc (NYSE:ESI)
Beneish M-Score
-3.21 (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 -3.21 suggests that the company is not a manipulator.

ESI' s 10-Year Beneish M-Score Range
Min: -4.46   Max: -0.21
Current: -3.21

-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 -2.99.


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 * 0.7071+0.528 * 0.9786+0.404 * 1.5244+0.892 * 0.9274+0.115 * 0.9537
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.8776+4.679 * -0.1273-0.327 * 1.0479
=-3.21

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

This Year (Jun15) TTM:Last Year (Jun14) TTM:
Accounts Receivable was $45.2 Mil.
Revenue was 214.231 + 229.975 + 243.203 + 242.561 = $930.0 Mil.
Gross Profit was 112.366 + 126.422 + 136.351 + 125.022 = $500.2 Mil.
Total Current Assets was $268.2 Mil.
Total Assets was $711.3 Mil.
Property, Plant and Equipment(Net PPE) was $150.1 Mil.
Depreciation, Depletion and Amortization(DDA) was $25.5 Mil.
Selling, General & Admin. Expense(SGA) was $407.4 Mil.
Total Current Liabilities was $297.2 Mil.
Long-Term Debt was $199.9 Mil.
Net Income was 0.716 + 10.447 + 14.917 + 10.322 = $36.4 Mil.
Non Operating Income was 0 + 0 + 0 + 16.631 = $16.6 Mil.
Cash Flow from Operations was -1.506 + 33.533 + 45.174 + 33.122 = $110.3 Mil.
Accounts Receivable was $68.9 Mil.
Revenue was 238.096 + 237.923 + 267.173 + 259.617 = $1,002.8 Mil.
Gross Profit was 121.82 + 117.808 + 148.741 + 139.413 = $527.8 Mil.
Total Current Assets was $407.6 Mil.
Total Assets was $776.2 Mil.
Property, Plant and Equipment(Net PPE) was $158.9 Mil.
Depreciation, Depletion and Amortization(DDA) was $25.6 Mil.
Selling, General & Admin. Expense(SGA) was $500.6 Mil.
Total Current Liabilities was $459.3 Mil.
Long-Term Debt was $58.4 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)
=(45.204 / 929.97) / (68.937 / 1002.809)
=0.04860802 / 0.0687439
=0.7071

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)
=(126.422 / 1002.809) / (112.366 / 929.97)
=0.52630361 / 0.53782488
=0.9786

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 - (268.24 + 150.095) / 711.3) / (1 - (407.552 + 158.947) / 776.219)
=0.41187263 / 0.27018148
=1.5244

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
=929.97 / 1002.809
=0.9274

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))
=(25.579 / (25.579 + 158.947)) / (25.528 / (25.528 + 150.095))
=0.13862003 / 0.14535682
=0.9537

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)
=(407.382 / 929.97) / (500.568 / 1002.809)
=0.43805929 / 0.49916584
=0.8776

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)
=((199.925 + 297.231) / 711.3) / ((58.442 + 459.278) / 776.219)
=0.69893997 / 0.66697672
=1.0479

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
=(36.402 - 16.631 - 110.323) / 711.3
=-0.1273

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 -3.21 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

Mar13Jun13Sep13Dec13Mar14Jun14Sep14Dec14Mar15Jun15
DSRI 2.26382.01111.6391.51310.87510.63590.62990.51960.64170.7071
GMI 1.08791.08251.08531.06431.081.06651.06041.0490.99110.9786
AQI 1.82931.51151.4651.72671.19331.1611.30391.58951.43041.5244
SGI 0.84650.83430.82320.83340.83180.86090.88750.89690.93040.9274
DEPI 0.91560.92260.95120.96160.98751.00171.00430.96570.95130.9537
SGAI 1.35821.36021.35941.18241.17321.17881.18360.95220.90630.8776
LVGI 1.05031.05191.12790.97680.82690.86091.00411.08311.08471.0479
TATA 0.13610.0446-0.0396-0.039-0.2116-0.2541-0.2537-0.1657-0.1547-0.1273
M-score -0.52-1.33-2.11-2.04-3.59-4.01-3.99-3.55-3.44-3.21
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