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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 Corporation has a M-score of -2.58 suggests that the company is not a manipulator.
During the past 13 years, the highest Beneish M-Score of Cintas Corporation was -1.91. The lowest was -3.27. And the median was -2.54.
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 Corporation 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 * 0.7312||+||0.528 * 0.9914||+||0.404 * 0.97||+||0.892 * 1.4192||+||0.115 * 1.3363|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0022||+||4.679 * -0.0539||-||0.327 * 0.9826|
|This Year (Feb14) TTM:||Last Year (Feb13) TTM:|
|Accounts Receivable was $530 Mil.|
Revenue was 1130.237 + 1143.753 + 1120.343 + 1129.086 = $4,523 Mil.
Gross Profit was 479.125 + 476.919 + 465.98 + 467.215 = $1,889 Mil.
Total Current Assets was $1,665 Mil.
Total Assets was $4,400 Mil.
Property, Plant and Equipment(Net PPE) was $981 Mil.
Depreciation, Depletion and Amortization(DDA) was $170 Mil.
Selling, General & Admin. Expense(SGA) was $1,292 Mil.
Total Current Liabilities was $553 Mil.
Long-Term Debt was $1,301 Mil.
Net Income was 84.602 + 84.862 + 77.754 + 85.977 = $333 Mil.
Non Operating Income was 0 + 0 + 0 + 0 = $0 Mil.
Cash Flow from Operations was 163.493 + 139.721 + 82.559 + 184.405 = $570 Mil.
|Accounts Receivable was $510 Mil.
Revenue was 1075.674 + 1060.386 + 1051.325 + 0 = $3,187 Mil.
Gross Profit was 441.941 + 432.036 + 445.875 + 0 = $1,320 Mil.
Total Current Assets was $1,509 Mil.
Total Assets was $4,221 Mil.
Property, Plant and Equipment(Net PPE) was $977 Mil.
Depreciation, Depletion and Amortization(DDA) was $240 Mil.
Selling, General & Admin. Expense(SGA) was $909 Mil.
Total Current Liabilities was $501 Mil.
Long-Term Debt was $1,309 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)|
|=||(529.668 / 4523.419)||/||(510.455 / 3187.385)|
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)|
|=||(476.919 / 3187.385)||/||(479.125 / 4523.419)|
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 - (1664.909 + 981.197) / 4400.441)||/||(1 - (1509.452 + 976.844) / 4221.299)|
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))|
|=||(240.429 / (240.429 + 976.844))||/||(170.183 / (170.183 + 981.197))|
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)|
|=||(1292.164 / 4523.419)||/||(908.512 / 3187.385)|
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)|
|=||((1300.523 + 552.802) / 4400.441)||/||((1308.656 + 500.752) / 4221.299)|
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|
|=||(333.195 - 0||-||570.178)||/||4400.441|
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 Corporation has a M-score of -2.58 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 Corporation Annual Data
Cintas Corporation Quarterly Data