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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.
TAL Education Group has a M-score of -1.57 signals that the company is a manipulator.
During the past 6 years, the highest Beneish M-Score of TAL Education Group was -1.57. The lowest was -2.96. And the median was -2.35.
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 TAL Education Group 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||+||0.528 * 0.9134||+||0.404 * 2.7506||+||0.892 * 1.42||+||0.115 * 0.8317|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0357||+||4.679 * -0.0414||-||0.327 * 0.7093|
|This Year (Aug14) TTM:||Last Year (Aug13) TTM:|
|Accounts Receivable was $11.4 Mil.|
Revenue was 122.371 + 89.026 + 86.999 + 73.53 = $371.9 Mil.
Gross Profit was 69.133 + 47.332 + 46.231 + 37.668 = $200.4 Mil.
Total Current Assets was $578.2 Mil.
Total Assets was $740.0 Mil.
Property, Plant and Equipment(Net PPE) was $86.3 Mil.
Depreciation, Depletion and Amortization(DDA) was $10.0 Mil.
Selling, General & Admin. Expense(SGA) was $131.1 Mil.
Total Current Liabilities was $226.2 Mil.
Long-Term Debt was $0.0 Mil.
Net Income was 29.118 + 13.35 + 16.71 + 12.509 = $71.7 Mil.
Non Operating Income was 1.438 + -0.282 + -0.365 + 0.002 = $0.8 Mil.
Cash Flow from Operations was 0 + 0 + 101.558 + 0 = $101.6 Mil.
|Accounts Receivable was $0.0 Mil.
Revenue was 91.968 + 61.398 + 59.648 + 48.905 = $261.9 Mil.
Gross Profit was 48.974 + 29.479 + 28.259 + 22.167 = $128.9 Mil.
Total Current Assets was $311.8 Mil.
Total Assets was $404.6 Mil.
Property, Plant and Equipment(Net PPE) was $77.9 Mil.
Depreciation, Depletion and Amortization(DDA) was $7.4 Mil.
Selling, General & Admin. Expense(SGA) was $89.1 Mil.
Total Current Liabilities was $174.4 Mil.
Long-Term Debt was $0.0 Mil.
1. DSRI = Days Sales in Receivables Index
A large increase in DSR could be indicative of revenue inflation.
|DSRI||=||(Receivables_t / Revenue_t)||/||(Receivables_t-1 / Revenue_t-1)|
|=||(11.419 / 371.926)||/||(0 / 261.919)|
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.
|=||(GrossProfit_t-1 / Revenue_t-1)||/||(GrossProfit_t / Revenue_t)|
|=||(47.332 / 261.919)||/||(69.133 / 371.926)|
3. AQI = Asset Quality Index
AQI is the ratio of asset quality in year t to year t-1.
|AQI||=||(1 - (CurrentAssets_t + PPE_t) / TotalAssets_t)||/||(1 - (CurrentAssets_t-1 + PPE_t-1) / TotalAssets_t-1)|
|=||(1 - (578.186 + 86.327) / 739.959)||/||(1 - (311.758 + 77.875) / 404.632)|
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.
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))|
|=||(7.367 / (7.367 + 77.875))||/||(10.011 / (10.011 + 86.327))|
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)|
|=||(131.088 / 371.926)||/||(89.134 / 261.919)|
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)|
|=||((0 + 226.2) / 739.959)||/||((0 + 174.386) / 404.632)|
8. TATA = Total Accruals to Total Assets
Total accruals calculated as the change in working capital accounts other than cash less depreciation.
|=||(NetIncome_t - NonOperatingIncome_t||-||CashFlowsfromOperations_t)||/||TotalAssets_t|
|=||(71.687 - 0.793||-||101.558)||/||739.959|
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.
TAL Education Group has a M-score of -1.57 signals that the company is likely to be a manipulator.
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
TAL Education Group Annual Data
TAL Education Group Quarterly Data