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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 Cintas Corp was -2.01. The lowest was -3.15. And the median was -2.61.
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 Cintas 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 * 1.04||+||0.528 * 0.9934||+||0.404 * 0.8928||+||0.892 * 1.0634||+||0.115 * 1.1702|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9904||+||4.679 * 0.0401||-||0.327 * 1.0242|
* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.
|This Year (Feb16) TTM:||Last Year (Feb15) TTM:|
|Accounts Receivable was $551 Mil.|
Revenue was 1216.083 + 1219.08 + 1198.89 + 1142.583 = $4,777 Mil.
Gross Profit was 524.608 + 527.4 + 524.144 + 486.66 = $2,063 Mil.
Total Current Assets was $1,759 Mil.
Total Assets was $4,231 Mil.
Property, Plant and Equipment(Net PPE) was $965 Mil.
Depreciation, Depletion and Amortization(DDA) was $147 Mil.
Selling, General & Admin. Expense(SGA) was $1,306 Mil.
Total Current Liabilities was $859 Mil.
Long-Term Debt was $1,050 Mil.
Net Income was 117.341 + 345.1 + 100.181 + 105.215 = $668 Mil.
Non Operating Income was 0 + 0 + 0 + -1.667 = $-2 Mil.
Cash Flow from Operations was 32.117 + 121.954 + 143.083 + 202.63 = $500 Mil.
|Accounts Receivable was $498 Mil.
Revenue was 1108.847 + 1123.379 + 1102.077 + 1157.479 = $4,492 Mil.
Gross Profit was 475.307 + 481.424 + 477.946 + 492.362 = $1,927 Mil.
Total Current Assets was $1,710 Mil.
Total Assets was $4,266 Mil.
Property, Plant and Equipment(Net PPE) was $853 Mil.
Depreciation, Depletion and Amortization(DDA) was $156 Mil.
Selling, General & Admin. Expense(SGA) was $1,240 Mil.
Total Current Liabilities was $579 Mil.
Long-Term Debt was $1,300 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)|
|=||(550.748 / 4776.636)||/||(497.978 / 4491.782)|
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)|
|=||(1927.039 / 4491.782)||/||(2062.812 / 4776.636)|
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 - (1758.824 + 964.68) / 4231.21)||/||(1 - (1710.125 + 853.391) / 4266.346)|
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))|
|=||(156.499 / (156.499 + 853.391))||/||(147.255 / (147.255 + 964.68))|
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)|
|=||(1306.285 / 4776.636)||/||(1240.329 / 4491.782)|
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)|
|=||((1050 + 858.804) / 4231.21)||/||((1300 + 579.231) / 4266.346)|
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|
|=||(667.837 - -1.667||-||499.784)||/||4231.21|
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.
Cintas Corp has a M-score of -2.23 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
Cintas Corp Annual Data
Cintas Corp Quarterly Data