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ITT Educational Services Inc (NYSE:ESI)
Beneish M-Score
-2.47 (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 -2.47 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: -2.47

-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 -2.92.


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 * 1.3098+0.528 * 1.022+0.404 * 1.1001+0.892 * 0.8317+0.115 * 1.1467
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9756+4.679 * -0.0508-0.327 * 0.8896
=-2.47

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

This Year (Jun16) TTM:Last Year (Jun15) TTM:
Accounts Receivable was $49.2 Mil.
Revenue was 176.324 + 191.499 + 202.442 + 203.178 = $773.4 Mil.
Gross Profit was 87.732 + 98.868 + 110.524 + 109.904 = $407.0 Mil.
Total Current Assets was $184.0 Mil.
Total Assets was $584.9 Mil.
Property, Plant and Equipment(Net PPE) was $134.4 Mil.
Depreciation, Depletion and Amortization(DDA) was $19.5 Mil.
Selling, General & Admin. Expense(SGA) was $330.6 Mil.
Total Current Liabilities was $255.3 Mil.
Long-Term Debt was $114.7 Mil.
Net Income was 4.31 + 4.107 + 10.447 + 1.688 = $20.6 Mil.
Non Operating Income was 0 + 0 + 0 + 0 = $0.0 Mil.
Cash Flow from Operations was -6.747 + 12.334 + 23.391 + 21.292 = $50.3 Mil.
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 $714.1 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 $297.3 Mil.
Long-Term Debt was $210.4 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)
=(49.242 / 773.443) / (45.204 / 929.97)
=0.06366597 / 0.04860802
=1.3098

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)
=(500.161 / 929.97) / (407.028 / 773.443)
=0.53782488 / 0.52625468
=1.022

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 - (183.978 + 134.402) / 584.875) / (1 - (268.24 + 150.095) / 714.087)
=0.45564437 / 0.41416802
=1.1001

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
=773.443 / 929.97
=0.8317

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))
=(25.528 / (25.528 + 150.095)) / (19.511 / (19.511 + 134.402))
=0.14535682 / 0.12676642
=1.1467

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)
=(330.558 / 773.443) / (407.382 / 929.97)
=0.42738508 / 0.43805929
=0.9756

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)
=((114.711 + 255.263) / 584.875) / ((210.421 + 297.334) / 714.087)
=0.63256935 / 0.71105482
=0.8896

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
=(20.552 - 0 - 50.27) / 584.875
=-0.0508

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 -2.47 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 0.6081.40791.68532.20790.66680.74271.91281.51310.51961.1916
GMI 0.98810.90040.94460.94390.99381.05041.08551.06431.0490.964
AQI 1.16591.26690.24972.81071.88461.05631.49531.72671.60111.0384
SGI 1.10141.14751.16771.29931.21020.93950.85780.83340.89690.8836
DEPI 0.96420.96621.11921.04110.94910.97860.90910.96160.96571.0768
SGAI 1.03411.0660.97490.95690.96651.04651.33921.18240.95220.989
LVGI 1.82951.05350.83411.03461.06390.90551.01830.97681.09880.918
TATA -0.0809-0.04940.0469-0.0016-0.2733-0.10930.0464-0.039-0.1728-0.0804
M-score -3.35-2.18-1.74-0.41-3.54-3.21-1.38-2.04-3.58-2.75

ITT Educational Services Inc Quarterly Data

Mar14Jun14Sep14Dec14Mar15Jun15Sep15Dec15Mar16Jun16
DSRI 0.87510.63590.62990.51960.64170.70710.69151.19161.19821.3098
GMI 1.081.06651.06041.0490.99110.97860.95630.9641.00421.022
AQI 1.20091.17011.31871.60111.42911.5211.3411.03841.08771.1001
SGI 0.83180.86090.88750.89690.93040.92740.90350.88360.85060.8317
DEPI 0.98751.00171.00430.96570.95130.95370.96651.07681.09771.1467
SGAI 1.17321.17881.18360.95220.90630.87760.83380.9891.00350.9756
LVGI 0.83250.86781.01521.09881.09091.05760.91560.9180.90380.8896
TATA -0.2147-0.2578-0.2598-0.1728-0.1583-0.1303-0.0975-0.0804-0.0619-0.0508
M-score -3.60-4.03-4.01-3.58-3.46-3.23-3.14-2.75-2.64-2.47
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