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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 -2.01. 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 * 0.9618||+||0.528 * 0.967||+||0.404 * 0.9022||+||0.892 * 1.019||+||0.115 * 0.9521|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9923||+||4.679 * -0.0789||-||0.327 * 1.0441|
|This Year (Nov14) TTM:||Last Year (Nov13) TTM:|
|Accounts Receivable was $510 Mil.|
Revenue was 1123.379 + 1102.077 + 1157.479 + 1130.237 = $4,513 Mil.
Gross Profit was 481.424 + 477.946 + 492.362 + 479.125 = $1,931 Mil.
Total Current Assets was $2,146 Mil.
Total Assets was $4,698 Mil.
Property, Plant and Equipment(Net PPE) was $845 Mil.
Depreciation, Depletion and Amortization(DDA) was $153 Mil.
Selling, General & Admin. Expense(SGA) was $1,268 Mil.
Total Current Liabilities was $852 Mil.
Long-Term Debt was $1,300 Mil.
Net Income was 120.412 + 110.108 + 127.224 + 84.602 = $442 Mil.
Non Operating Income was 0 + 28.358 + 106.441 + 0 = $135 Mil.
Cash Flow from Operations was 144.372 + 148.201 + 222.196 + 163.493 = $678 Mil.
|Accounts Receivable was $521 Mil.
Revenue was 1123.931 + 1100.246 + 1129.086 + 1075.674 = $4,429 Mil.
Gross Profit was 467.079 + 456.095 + 467.215 + 441.941 = $1,832 Mil.
Total Current Assets was $1,619 Mil.
Total Assets was $4,365 Mil.
Property, Plant and Equipment(Net PPE) was $989 Mil.
Depreciation, Depletion and Amortization(DDA) was $170 Mil.
Selling, General & Admin. Expense(SGA) was $1,254 Mil.
Total Current Liabilities was $615 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)|
|=||(510.153 / 4513.172)||/||(520.523 / 4428.937)|
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)|
|=||(477.946 / 4428.937)||/||(481.424 / 4513.172)|
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 - (2145.98 + 845.127) / 4697.571)||/||(1 - (1618.782 + 988.897) / 4365.398)|
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))|
|=||(169.523 / (169.523 + 988.897))||/||(153.491 / (153.491 + 845.127))|
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)|
|=||(1267.602 / 4513.172)||/||(1253.613 / 4428.937)|
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 + 851.764) / 4697.571)||/||((1300.615 + 614.561) / 4365.398)|
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|
|=||(442.346 - 134.799||-||678.262)||/||4697.571|
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 -2.94 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