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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 0.35. The lowest was -3.24. And the median was -2.45.
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 * 1.0686||+||0.528 * 0.9654||+||0.404 * 0.9938||+||0.892 * 1.1686||+||0.115 * 1.0249|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0396||+||4.679 * -0.0291||-||0.327 * 1.1616|
|This Year (Apr16) TTM:||Last Year (Apr15) TTM:|
|Accounts Receivable was $91.5 Mil.|
Revenue was 173.703 + 158.271 + 153.779 + 151.255 = $637.0 Mil.
Gross Profit was 80.321 + 72.337 + 71.198 + 68.763 = $292.6 Mil.
Total Current Assets was $225.9 Mil.
Total Assets was $706.9 Mil.
Property, Plant and Equipment(Net PPE) was $72.6 Mil.
Depreciation, Depletion and Amortization(DDA) was $25.2 Mil.
Selling, General & Admin. Expense(SGA) was $184.4 Mil.
Total Current Liabilities was $91.3 Mil.
Long-Term Debt was $132.0 Mil.
Net Income was 14.019 + 15.389 + 14.254 + 13.273 = $56.9 Mil.
Non Operating Income was 0 + 0 + 0 + 0 = $0.0 Mil.
Cash Flow from Operations was 23.532 + 13.156 + 15.115 + 25.696 = $77.5 Mil.
|Accounts Receivable was $73.3 Mil.
Revenue was 141.508 + 135.43 + 136.811 + 131.377 = $545.1 Mil.
Gross Profit was 63.599 + 60.591 + 60.514 + 57.047 = $241.8 Mil.
Total Current Assets was $181.1 Mil.
Total Assets was $579.9 Mil.
Property, Plant and Equipment(Net PPE) was $61.6 Mil.
Depreciation, Depletion and Amortization(DDA) was $22.2 Mil.
Selling, General & Admin. Expense(SGA) was $151.8 Mil.
Total Current Liabilities was $66.2 Mil.
Long-Term Debt was $91.5 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)|
|=||(91.524 / 637.008)||/||(73.295 / 545.126)|
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)|
|=||(241.751 / 545.126)||/||(292.619 / 637.008)|
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 - (225.929 + 72.551) / 706.899)||/||(1 - (181.149 + 61.628) / 579.907)|
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))|
|=||(22.153 / (22.153 + 61.628))||/||(25.227 / (25.227 + 72.551))|
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)|
|=||(184.427 / 637.008)||/||(151.815 / 545.126)|
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)|
|=||((132 + 91.274) / 706.899)||/||((91.5 + 66.186) / 579.907)|
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|
|=||(56.935 - 0||-||77.499)||/||706.899|
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 -2.48 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