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GuruFocus has detected 5 Warning Signs with Cintas Corp $CTAS.
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Cintas Corp (NAS:CTAS)
Beneish M-Score
-2.29 (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.

Cintas Corp has a M-score of -2.29 suggests that the company is not a manipulator.

CTAS' s Beneish M-Score Range Over the Past 10 Years
Min: -3.12   Max: -1.2
Current: -2.29

-3.12
-1.2

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 -2.60.


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 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 * 1.017+0.528 * 0.9805+0.404 * 1.0955+0.892 * 1.0876+0.115 * 1.0614
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0266+4.679 * 0.0057-0.327 * 0.8685
=-2.29

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

This Year (Nov16) TTM:Last Year (Nov15) TTM:
Accounts Receivable was $607 Mil.
Revenue was 1296.923 + 1294.13 + 1271.405 + 1216.083 = $5,079 Mil.
Gross Profit was 571.427 + 583.774 + 553.718 + 524.608 = $2,234 Mil.
Total Current Assets was $1,601 Mil.
Total Assets was $4,215 Mil.
Property, Plant and Equipment(Net PPE) was $1,067 Mil.
Depreciation, Depletion and Amortization(DDA) was $171 Mil.
Selling, General & Admin. Expense(SGA) was $1,425 Mil.
Total Current Liabilities was $749 Mil.
Long-Term Debt was $1,045 Mil.
Net Income was 140.377 + 138.091 + 130.898 + 117.341 = $527 Mil.
Non Operating Income was 0 + 0 + 0 + 0 = $0 Mil.
Cash Flow from Operations was 144.133 + 157.588 + 168.691 + 32.117 = $503 Mil.
Accounts Receivable was $549 Mil.
Revenue was 1219.08 + 1198.89 + 1142.583 + 1108.847 = $4,669 Mil.
Gross Profit was 527.4 + 524.144 + 486.66 + 475.307 = $2,014 Mil.
Total Current Assets was $2,043 Mil.
Total Assets was $4,451 Mil.
Property, Plant and Equipment(Net PPE) was $917 Mil.
Depreciation, Depletion and Amortization(DDA) was $158 Mil.
Selling, General & Admin. Expense(SGA) was $1,276 Mil.
Total Current Liabilities was $1,131 Mil.
Long-Term Debt was $1,050 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)
=(607.452 / 5078.541) / (549.19 / 4669.4)
=0.11961152 / 0.11761468
=1.017

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)
=(2013.511 / 4669.4) / (2233.527 / 5078.541)
=0.43121407 / 0.43979698
=0.9805

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 - (1600.662 + 1067.214) / 4214.579) / (1 - (2043.28 + 916.544) / 4450.792)
=0.36698873 / 0.33498937
=1.0955

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
=5078.541 / 4669.4
=1.0876

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))
=(157.823 / (157.823 + 916.544)) / (171.435 / (171.435 + 1067.214))
=0.14689859 / 0.13840483
=1.0614

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)
=(1425.029 / 5078.541) / (1276.319 / 4669.4)
=0.28059811 / 0.27333683
=1.0266

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)
=((1044.834 + 748.757) / 4214.579) / ((1050 + 1130.981) / 4450.792)
=0.42556825 / 0.49002088
=0.8685

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
=(526.707 - 0 - 502.529) / 4214.579
=0.0057

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 -2.29 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 local exchange's currency.

Cintas Corp Annual Data

May07May08May09May10May11May12May13May14May15May16
DSRI 0.96280.99020.86761.07761.10290.97591.06291.03770.91411.036
GMI 1.00190.9991.03940.97310.99970.99651.02640.98970.97220.9884
AQI 1.03560.9741.01320.94851.00061.02640.99241.01140.93680.9795
SGI 1.08911.06230.95860.93981.07421.07651.03510.98771.06751.0957
DEPI 0.97710.97551.11941.01151.05640.97830.97790.78831.20711.0599
SGAI 1.0111.03531.0231.09080.98050.95280.95670.97811.00041.0044
LVGI 1.01930.95940.84931.00821.34111.05441.02621.01230.99721.0536
TATA -0.0322-0.0544-0.0799-0.0882-0.0216-0.0413-0.0546-0.0519-0.04090.0555
M-score -2.58-2.69-2.93-2.93-2.52-2.63-2.64-2.72-2.71-2.13

Cintas Corp Quarterly Data

Aug14Nov14Feb15May15Aug15Nov15Feb16May16Aug16Nov16
DSRI 0.97881.01820.98520.91410.99590.96720.97081.0361.94331.017
GMI 0.97240.96930.97280.97220.98150.98730.98940.98840.98250.9805
AQI 0.92310.90221.00110.93680.96730.92220.89280.97951.02061.0955
SGI 0.97690.96250.95431.06751.09011.11311.13921.09571.09341.0876
DEPI 0.81050.81911.00851.20711.20961.21621.10911.05991.05111.0614
SGAI 0.9790.9630.95041.00041.00071.01481.02951.00441.0131.0266
LVGI 1.00851.04411.04580.99721.14691.06981.02421.05360.86440.8685
TATA -0.0629-0.0544-0.0391-0.0409-0.03750.02080.03970.05550.06030.0057
M-score -2.88-2.84-2.74-2.71-2.63-2.35-2.25-2.13-1.20-2.29
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