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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.
During the past 13 years, the highest Beneish M-Score of Cantel Medical Corp was 0.34. The lowest was -3.19. And the median was -2.42.
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 Cantel Medical 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 * 0.9479||+||0.528 * 0.9877||+||0.404 * 0.9567||+||0.892 * 1.1477||+||0.115 * 1.0993|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.043||+||4.679 * -0.0322||-||0.327 * 1.1235|
|This Year (Jan15) TTM:||Last Year (Jan14) TTM:|
|Accounts Receivable was $65.2 Mil.|
Revenue was 135.43 + 136.811 + 131.377 + 120.058 = $523.7 Mil.
Gross Profit was 60.591 + 60.514 + 57.047 + 52.418 = $230.6 Mil.
Total Current Assets was $178.0 Mil.
Total Assets was $567.7 Mil.
Property, Plant and Equipment(Net PPE) was $61.4 Mil.
Depreciation, Depletion and Amortization(DDA) was $20.7 Mil.
Selling, General & Admin. Expense(SGA) was $146.0 Mil.
Total Current Liabilities was $62.3 Mil.
Long-Term Debt was $95.5 Mil.
Net Income was 11.085 + 11.239 + 10.705 + 10.249 = $43.3 Mil.
Non Operating Income was 0 + 0 + 0 + 0 = $0.0 Mil.
Cash Flow from Operations was 6.135 + 12.703 + 23.545 + 19.178 = $61.6 Mil.
|Accounts Receivable was $59.9 Mil.
Revenue was 119.042 + 118.272 + 113.973 + 105.009 = $456.3 Mil.
Gross Profit was 52.335 + 51.499 + 49.114 + 45.484 = $198.4 Mil.
Total Current Assets was $148.0 Mil.
Total Assets was $493.2 Mil.
Property, Plant and Equipment(Net PPE) was $47.1 Mil.
Depreciation, Depletion and Amortization(DDA) was $18.1 Mil.
Selling, General & Admin. Expense(SGA) was $122.0 Mil.
Total Current Liabilities was $47.5 Mil.
Long-Term Debt was $74.5 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)|
|=||(65.217 / 523.676)||/||(59.947 / 456.296)|
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)|
|=||(60.514 / 456.296)||/||(60.591 / 523.676)|
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 - (177.961 + 61.408) / 567.675)||/||(1 - (147.963 + 47.072) / 493.185)|
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))|
|=||(18.061 / (18.061 + 47.072))||/||(20.715 / (20.715 + 61.408))|
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)|
|=||(145.993 / 523.676)||/||(121.964 / 456.296)|
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)|
|=||((95.5 + 62.307) / 567.675)||/||((74.5 + 47.524) / 493.185)|
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|
|=||(43.278 - 0||-||61.561)||/||567.675|
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.
Cantel Medical Corp has a M-score of -2.61 suggests that the company will not 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
Cantel Medical Corp Annual Data
Cantel Medical Corp Quarterly Data