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Cintas Corp (NAS:CTAS)
Beneish M-Score
-1.20 (As of Today)

Warning Sign:

Beneish M-Score -1.2 higher than -2.22, which implies that it might have manipulated its financial results.

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 -1.20 signals that the company is a manipulator.

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

-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 -2.61.

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 * 1.9433 + 0.528 * 0.9825 + 0.404 * 1.0206 + 0.892 * 1.0934 + 0.115 * 1.0511 - 0.172 * SGAI + 4.679 * TATA - 0.327 * LVGI - 0.172 * 1.013 + 4.679 * 0.0603 - 0.327 * 0.8644 = -1.20

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

 This Year (Aug16) TTM: Last Year (Aug15) TTM: Accounts Receivable was \$1,128 Mil. Revenue was 1294.13 + 1271.405 + 1216.083 + 1219.08 = \$5,001 Mil. Gross Profit was 583.774 + 553.718 + 524.608 + 527.4 = \$2,190 Mil. Total Current Assets was \$1,595 Mil. Total Assets was \$4,167 Mil. Property, Plant and Equipment(Net PPE) was \$1,033 Mil. Depreciation, Depletion and Amortization(DDA) was \$169 Mil. Selling, General & Admin. Expense(SGA) was \$1,384 Mil. Total Current Liabilities was \$711 Mil. Long-Term Debt was \$1,045 Mil. Net Income was 138.091 + 130.898 + 117.341 + 345.1 = \$731 Mil. Non Operating Income was 0 + 0 + 0 + 0 = \$0 Mil. Cash Flow from Operations was 157.588 + 168.691 + 32.117 + 121.954 = \$480 Mil. Accounts Receivable was \$531 Mil. Revenue was 1198.89 + 1142.583 + 1108.847 + 1123.379 = \$4,574 Mil. Gross Profit was 524.144 + 486.66 + 475.307 + 481.424 = \$1,968 Mil. Total Current Assets was \$1,734 Mil. Total Assets was \$4,123 Mil. Property, Plant and Equipment(Net PPE) was \$897 Mil. Depreciation, Depletion and Amortization(DDA) was \$155 Mil. Selling, General & Admin. Expense(SGA) was \$1,249 Mil. Total Current Liabilities was \$959 Mil. Long-Term Debt was \$1,050 Mil.

1. DSRI = Days Sales in Receivables Index

Measured as the ratio of daysÂ’ 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) = (1128.496 / 5000.698) / (531.127 / 4573.699) = 0.2256677 / 0.11612636 = 1.9433

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) = (1967.535 / 4573.699) / (2189.5 / 5000.698) = 0.43018463 / 0.43783888 = 0.9825

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 - (1594.748 + 1033.16) / 4167.145) / (1 - (1733.952 + 896.786) / 4122.949) = 0.36937448 / 0.36192808 = 1.0206

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 = 5000.698 / 4573.699 = 1.0934

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)) = (155.196 / (155.196 + 896.786)) / (168.679 / (168.679 + 1033.16)) = 0.14752724 / 0.14035075 = 1.0511

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) = (1383.511 / 5000.698) / (1249.109 / 4573.699) = 0.27666358 / 0.27310695 = 1.013

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) = ((1044.628 + 710.859) / 4167.145) / ((1050 + 959.326) / 4122.949) = 0.42126852 / 0.48735165 = 0.8644

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 = (731.43 - 0 - 480.35) / 4167.145 = 0.0603

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 -1.20 signals that the company is likely to be a manipulator.

Related Terms

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

 May07 May08 May09 May10 May11 May12 May13 May14 May15 May16 DSRI 0.9628 0.9902 0.8676 1.0776 1.1029 0.9759 1.0629 1.0377 0.9141 1.036 GMI 1.0019 0.999 1.0394 0.9731 0.9997 0.9965 1.0264 0.9897 0.9722 0.9884 AQI 1.0356 0.974 1.0132 0.9485 1.0006 1.0264 0.9924 1.0114 0.9368 0.9795 SGI 1.0891 1.0623 0.9586 0.9398 1.0742 1.0765 1.0351 0.9877 1.0675 1.0957 DEPI 0.9771 0.9755 1.1194 1.0115 1.0564 0.9783 0.9779 0.7883 1.2071 1.0599 SGAI 1.011 1.0353 1.023 1.0908 0.9805 0.9528 0.9567 0.9781 1.0004 1.0044 LVGI 1.0193 0.9594 0.8493 1.0082 1.3411 1.0544 1.0262 1.0123 0.9972 1.0536 TATA -0.0322 -0.0544 -0.0799 -0.0882 -0.0216 -0.0413 -0.0546 -0.0519 -0.0409 0.0555 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

 May14 Aug14 Nov14 Feb15 May15 Aug15 Nov15 Feb16 May16 Aug16 DSRI 1.0377 0.9788 1.0182 0.9852 0.9141 0.9959 0.9672 0.9708 1.036 1.9433 GMI 0.9897 0.9724 0.9693 0.9728 0.9722 0.9815 0.9873 0.9894 0.9884 0.9825 AQI 1.0114 0.9231 0.9022 1.0011 0.9368 0.9673 0.9222 0.8928 0.9795 1.0206 SGI 0.9877 0.9769 0.9625 0.9543 1.0675 1.0901 1.1131 1.1392 1.0957 1.0934 DEPI 0.7883 0.8105 0.8191 1.0085 1.2071 1.2096 1.2162 1.1091 1.0599 1.0511 SGAI 0.9781 0.979 0.963 0.9504 1.0004 1.0007 1.0148 1.0295 1.0044 1.013 LVGI 1.0123 1.0085 1.0441 1.0458 0.9972 1.1469 1.0698 1.0242 1.0536 0.8644 TATA -0.0519 -0.0629 -0.0544 -0.0391 -0.0409 -0.0375 0.0208 0.0397 0.0555 0.0603 M-score -2.72 -2.88 -2.84 -2.74 -2.71 -2.63 -2.35 -2.25 -2.13 -1.20
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