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CareFusion Corp (NYSE:CFN)
Beneish M-Score
-2.44 (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.

CareFusion Corp has a M-score of -2.44 suggests that the company is not a manipulator.

CFN' s 10-Year Beneish M-Score Range
Min: -2.84   Max: -2.39
Current: -2.44

-2.84
-2.39

During the past 8 years, the highest Beneish M-Score of CareFusion Corp was -2.39. The lowest was -2.84. And the median was -2.57.


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 CareFusion Corp 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 * 0.9989+0.528 * 1.0455+0.404 * 0.9615+0.892 * 1.1476+0.115 * 0.9158
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9662+4.679 * -0.0051-0.327 * 1.2147
=-2.44

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

This Year (Dec14) TTM:Last Year (Dec13) TTM:
Accounts Receivable was $517 Mil.
Revenue was 1069 + 922 + 1122 + 968 = $4,081 Mil.
Gross Profit was 535 + 457 + 547 + 472 = $2,011 Mil.
Total Current Assets was $3,275 Mil.
Total Assets was $9,198 Mil.
Property, Plant and Equipment(Net PPE) was $435 Mil.
Depreciation, Depletion and Amortization(DDA) was $206 Mil.
Selling, General & Admin. Expense(SGA) was $1,100 Mil.
Total Current Liabilities was $693 Mil.
Long-Term Debt was $1,988 Mil.
Net Income was 173 + 76 + 140 + 102 = $491 Mil.
Non Operating Income was 0 + -56 + 0 + 0 = $-56 Mil.
Cash Flow from Operations was 138 + 68 + 230 + 158 = $594 Mil.
Accounts Receivable was $451 Mil.
Revenue was 922 + 830 + 903 + 901 = $3,556 Mil.
Gross Profit was 466 + 423 + 467 + 476 = $1,832 Mil.
Total Current Assets was $2,829 Mil.
Total Assets was $8,631 Mil.
Property, Plant and Equipment(Net PPE) was $446 Mil.
Depreciation, Depletion and Amortization(DDA) was $186 Mil.
Selling, General & Admin. Expense(SGA) was $992 Mil.
Total Current Liabilities was $1,072 Mil.
Long-Term Debt was $999 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)
=(517 / 4081) / (451 / 3556)
=0.12668464 / 0.1268279
=0.9989

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)
=(457 / 3556) / (535 / 4081)
=0.5151856 / 0.49277138
=1.0455

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 - (3275 + 435) / 9198) / (1 - (2829 + 446) / 8631)
=0.59665145 / 0.62055382
=0.9615

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
=4081 / 3556
=1.1476

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))
=(186 / (186 + 446)) / (206 / (206 + 435))
=0.2943038 / 0.32137285
=0.9158

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)
=(1100 / 4081) / (992 / 3556)
=0.26954178 / 0.27896513
=0.9662

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)
=((1988 + 693) / 9198) / ((999 + 1072) / 8631)
=0.29147641 / 0.23994902
=1.2147

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
=(491 - -56 - 594) / 9198
=-0.0051

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.

CareFusion Corp has a M-score of -2.44 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.

CareFusion Corp Annual Data

Jun07Jun08Jun09Jun10Jun11Jun12Jun13Jun14
DSRI 1.12310.78080.98591.2363
GMI 0.97431.02510.96211.0494
AQI 0.94740.97841.00690.9698
SGI 1.01871.04590.98671.0823
DEPI 0.94740.9091.01451.0053
SGAI 0.9610.92560.96151.0004
LVGI 0.90611.00620.96951.3858
TATA -0.009-0.0425-0.0268-0.0278
M-score -2.40-2.83-2.63-2.43

CareFusion Corp Quarterly Data

Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14Dec14
DSRI 0.78520.83630.8630.98591.00061.04521.0371.23631.02830.9989
GMI 1.01981.01170.9880.96210.97160.98551.02061.04941.05031.0455
AQI 0.98480.98740.96941.00690.96641.04911.10970.96981.04750.9615
SGI 1.02941.03361.00640.98670.98230.98071.00421.08231.11041.1476
DEPI 0.92140.96091.021.01451.00961.0571.01861.00530.98690.9158
SGAI 0.91290.90590.94650.96150.98891.01050.99781.00040.98660.9662
LVGI 0.86830.87320.99070.96951.11681.1561.02131.38581.24981.2147
TATA -0.0515-0.0477-0.0409-0.0268-0.0224-0.0284-0.025-0.0236-0.0231-0.0051
M-score -2.84-2.77-2.80-2.63-2.66-2.62-2.51-2.41-2.50-2.44
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