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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 -1.20. The lowest was -3.12. And the median was -2.59.
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 * 1.0098||+||0.528 * 0.9762||+||0.404 * 1.0191||+||0.892 * 1.0768||+||0.115 * 1.0414|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0416||+||4.679 * -0.0293||-||0.327 * 0.8767|
|This Year (Feb17) TTM:||Last Year (Feb16) TTM:|
|Accounts Receivable was $599 Mil.|
Revenue was 1281.135 + 1296.923 + 1294.13 + 1271.405 = $5,144 Mil.
Gross Profit was 566.424 + 571.427 + 583.774 + 553.718 = $2,275 Mil.
Total Current Assets was $1,630 Mil.
Total Assets was $4,271 Mil.
Property, Plant and Equipment(Net PPE) was $1,090 Mil.
Depreciation, Depletion and Amortization(DDA) was $174 Mil.
Selling, General & Admin. Expense(SGA) was $1,465 Mil.
Total Current Liabilities was $944 Mil.
Long-Term Debt was $745 Mil.
Net Income was 118.005 + 140.377 + 138.091 + 130.898 = $527 Mil.
Non Operating Income was 0 + 0 + 0 + 0 = $0 Mil.
Cash Flow from Operations was 182.037 + 144.133 + 157.588 + 168.691 = $652 Mil.
|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 $162 Mil.
Selling, General & Admin. Expense(SGA) was $1,306 Mil.
Total Current Liabilities was $859 Mil.
Long-Term Debt was $1,050 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)|
|=||(598.863 / 5143.593)||/||(550.748 / 4776.636)|
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)|
|=||(2062.812 / 4776.636)||/||(2275.343 / 5143.593)|
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 - (1629.941 + 1090.209) / 4271.164)||/||(1 - (1758.824 + 964.68) / 4231.21)|
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))|
|=||(161.713 / (161.713 + 964.68))||/||(174.322 / (174.322 + 1090.209))|
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)|
|=||(1465.102 / 5143.593)||/||(1306.285 / 4776.636)|
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)|
|=||((745.189 + 943.968) / 4271.164)||/||((1050 + 858.804) / 4231.21)|
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|
|=||(527.371 - 0||-||652.449)||/||4271.164|
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 -2.51 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