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GuruFocus has detected 2 Warning Signs with CA Inc $CA.
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CA Inc (NAS:CA)
Beneish M-Score
-2.36 (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.

CA Inc has a M-score of -2.36 suggests that the company is not a manipulator.

CA' s Beneish M-Score Range Over the Past 10 Years
Min: -3.49   Max: -2.06
Current: -2.36

-3.49
-2.06

During the past 13 years, the highest Beneish M-Score of CA Inc was -2.06. The lowest was -3.49. And the median was -2.69.


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 CA 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 * 1.244+0.528 * 0.9967+0.404 * 1.0372+0.892 * 1.0027+0.115 * 1.0432
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0191+4.679 * -0.0209-0.327 * 1.0607
=-2.36

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

This Year (Mar17) TTM:Last Year (Mar16) TTM:
Accounts Receivable was $706 Mil.
Revenue was 1012 + 1007 + 1018 + 999 = $4,036 Mil.
Gross Profit was 863 + 865 + 879 + 856 = $3,463 Mil.
Total Current Assets was $3,733 Mil.
Total Assets was $12,610 Mil.
Property, Plant and Equipment(Net PPE) was $237 Mil.
Depreciation, Depletion and Amortization(DDA) was $320 Mil.
Selling, General & Admin. Expense(SGA) was $1,403 Mil.
Total Current Liabilities was $3,006 Mil.
Long-Term Debt was $2,773 Mil.
Net Income was 157 + 208 + 212 + 198 = $775 Mil.
Non Operating Income was 10 + 17 + -27 + 0 = $0 Mil.
Cash Flow from Operations was 419 + 517 + -58 + 161 = $1,039 Mil.
Accounts Receivable was $566 Mil.
Revenue was 1009 + 1034 + 1005 + 977 = $4,025 Mil.
Gross Profit was 859 + 886 + 857 + 840 = $3,442 Mil.
Total Current Assets was $3,561 Mil.
Total Assets was $11,204 Mil.
Property, Plant and Equipment(Net PPE) was $242 Mil.
Depreciation, Depletion and Amortization(DDA) was $362 Mil.
Selling, General & Admin. Expense(SGA) was $1,373 Mil.
Total Current Liabilities was $2,894 Mil.
Long-Term Debt was $1,947 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)
=(706 / 4036) / (566 / 4025)
=0.17492567 / 0.14062112
=1.244

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)
=(3442 / 4025) / (3463 / 4036)
=0.85515528 / 0.85802775
=0.9967

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 - (3733 + 237) / 12610) / (1 - (3561 + 242) / 11204)
=0.6851705 / 0.66056765
=1.0372

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
=4036 / 4025
=1.0027

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))
=(362 / (362 + 242)) / (320 / (320 + 237))
=0.59933775 / 0.57450628
=1.0432

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)
=(1403 / 4036) / (1373 / 4025)
=0.34762141 / 0.34111801
=1.0191

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)
=((2773 + 3006) / 12610) / ((1947 + 2894) / 11204)
=0.45828707 / 0.43207783
=1.0607

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
=(775 - 0 - 1039) / 12610
=-0.0209

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.

CA Inc has a M-score of -2.36 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 local exchange's currency.

CA Inc Annual Data

Mar08Mar09Mar10Mar11Mar12Mar13Mar14Mar15Mar16Mar17
DSRI 0.92480.86620.98270.96140.98761.01140.90350.82791.01411.244
GMI 0.99961.03220.94261.01241.00341.00641.00871.00220.99520.9967
AQI 0.93821.02391.05880.97821.04020.97980.95451.02981.07621.0372
SGI 1.08470.99860.98971.04781.0790.94250.97960.9660.94441.0027
DEPI 1.45630.85951.05230.8450.91380.84971.02340.95091.02561.0432
SGAI 0.90990.88911.0020.99630.98710.93490.93880.99241.01171.0191
LVGI 0.96780.85110.91380.97541.00140.97051.05660.88571.13291.0607
TATA -0.0508-0.0371-0.0495-0.0446-0.0435-0.03830.0088-0.0168-0.0224-0.0209
M-score -2.66-2.70-2.71-2.69-2.61-2.70-2.56-2.70-2.64-2.36

CA Inc Quarterly Data

Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16Dec16Mar17
DSRI 1.06520.82790.93260.94290.911.01410.91751.02210.90881.244
GMI 1.00231.00221.00141.00031.00030.99520.99660.99350.99330.9967
AQI 1.00711.02981.03311.0991.0561.07621.07211.0281.00291.0372
SGI 0.99610.9660.95080.93940.93430.94440.97050.99120.99851.0027
DEPI 1.01970.95090.96860.99361.00451.02560.99080.99581.00481.0432
SGAI 1.02270.99241.00761.02411.02751.01171.010.96420.95271.0191
LVGI 0.92720.88570.89050.96771.1371.13291.14331.05390.9661.0607
TATA -0.0075-0.0154-0.0199-0.0268-0.0308-0.0224-0.0215-0.0068-0.0254-0.0209
M-score -2.43-2.69-2.63-2.67-2.79-2.64-2.71-2.50-2.67-2.36
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