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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.
Cintas Corp has a M-score of -2.85 suggests that the company is not a manipulator.
During the past 13 years, the highest Beneish M-Score of Cintas Corp was -1.61. The lowest was -3.36. And the median was -2.52.
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 * 0.9544||+||0.528 * 0.9844||+||0.404 * 1.0114||+||0.892 * 1.0545||+||0.115 * 0.875|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0111||+||4.679 * -0.0762||-||0.327 * 1.0123|
|This Year (May14) TTM:||Last Year (May13) TTM:|
|Accounts Receivable was $508 Mil.|
Revenue was 1157.479 + 1130.237 + 1143.753 + 1120.343 = $4,552 Mil.
Gross Profit was 492.362 + 479.125 + 476.919 + 465.98 = $1,914 Mil.
Total Current Assets was $1,806 Mil.
Total Assets was $4,462 Mil.
Property, Plant and Equipment(Net PPE) was $856 Mil.
Depreciation, Depletion and Amortization(DDA) was $168 Mil.
Selling, General & Admin. Expense(SGA) was $1,303 Mil.
Total Current Liabilities was $630 Mil.
Long-Term Debt was $1,300 Mil.
Net Income was 127.224 + 84.602 + 84.862 + 77.754 = $374 Mil.
Non Operating Income was 106.441 + 0 + 0 + 0 = $106 Mil.
Cash Flow from Operations was 222.196 + 163.493 + 139.721 + 82.559 = $608 Mil.
|Accounts Receivable was $505 Mil.
Revenue was 1129.086 + 1075.674 + 1060.386 + 1051.325 = $4,316 Mil.
Gross Profit was 467.215 + 441.941 + 432.036 + 445.875 = $1,787 Mil.
Total Current Assets was $1,625 Mil.
Total Assets was $4,346 Mil.
Property, Plant and Equipment(Net PPE) was $987 Mil.
Depreciation, Depletion and Amortization(DDA) was $166 Mil.
Selling, General & Admin. Expense(SGA) was $1,222 Mil.
Total Current Liabilities was $556 Mil.
Long-Term Debt was $1,301 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)|
|=||(508.427 / 4551.812)||/||(505.151 / 4316.471)|
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)|
|=||(479.125 / 4316.471)||/||(492.362 / 4551.812)|
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 - (1805.681 + 855.702) / 4462.452)||/||(1 - (1624.826 + 986.703) / 4345.632)|
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))|
|=||(165.664 / (165.664 + 986.703))||/||(168.22 / (168.22 + 855.702))|
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)|
|=||(1302.752 / 4551.812)||/||(1221.856 / 4316.471)|
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)|
|=||((1300.477 + 630.131) / 4462.452)||/||((1300.979 + 556.256) / 4345.632)|
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|
|=||(374.442 - 106.441||-||607.969)||/||4462.452|
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 -2.85 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