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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.
Coventry Health Care, Inc. has a M-score of -2.19 signals that the company is a manipulator.
During the past 13 years, the highest Beneish M-Score of Coventry Health Care, Inc. was -1.74. The lowest was -3.13. And the median was -2.55.
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 Coventry Health Care, Inc. 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 * 1.052||+||0.528 * 1.0941||+||0.404 * 1.0071||+||0.892 * 1.0867||+||0.115 * 0.933|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9555||+||4.679 * 0.02||-||0.327 * 0.9503|
* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.
|This Year (Mar13) TTM:||Last Year (Mar12) TTM:|
|Accounts Receivable was $1,206 Mil.|
Revenue was 3520.235 + 3445.816 + 3457.783 + 3517.796 = $13,942 Mil.
Gross Profit was 774.099 + 766.803 + 716.818 + 693.498 = $2,951 Mil.
Total Current Assets was $3,054 Mil.
Total Assets was $8,955 Mil.
Property, Plant and Equipment(Net PPE) was $262 Mil.
Depreciation, Depletion and Amortization(DDA) was $154 Mil.
Selling, General & Admin. Expense(SGA) was $2,098 Mil.
Total Current Liabilities was $2,137 Mil.
Long-Term Debt was $1,585 Mil.
Net Income was 135.369 + 119.341 + 105.259 + 91.743 = $452 Mil.
Non Operating Income was 0 + 0 + 0 + 0 = $0 Mil.
Cash Flow from Operations was 222.225 + 249.394 + -260.289 + 61.024 = $272 Mil.
|Accounts Receivable was $1,055 Mil.
Revenue was 3691.967 + 3129.156 + 2975.543 + 3033.046 = $12,830 Mil.
Gross Profit was 815.667 + 723.334 + 718.464 + 714.059 = $2,972 Mil.
Total Current Assets was $3,119 Mil.
Total Assets was $9,018 Mil.
Property, Plant and Equipment(Net PPE) was $260 Mil.
Depreciation, Depletion and Amortization(DDA) was $137 Mil.
Selling, General & Admin. Expense(SGA) was $2,020 Mil.
Total Current Liabilities was $2,360 Mil.
Long-Term Debt was $1,585 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)|
|=||(1206.027 / 13941.63)||/||(1054.978 / 12829.712)|
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)|
|=||(766.803 / 12829.712)||/||(774.099 / 13941.63)|
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 - (3053.929 + 261.668) / 8955.277)||/||(1 - (3118.818 + 259.704) / 9017.819)|
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))|
|=||(137.352 / (137.352 + 259.704))||/||(154.187 / (154.187 + 261.668))|
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)|
|=||(2097.649 / 13941.63)||/||(2020.339 / 12829.712)|
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)|
|=||((1585.312 + 2137.486) / 8955.277)||/||((1584.823 + 2360.217) / 9017.819)|
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|
|=||(451.712 - 0||-||272.354)||/||8955.277|
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.
Coventry Health Care, Inc. has a M-score of -2.19 signals that the company is likely to 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
Coventry Health Care, Inc. Annual Data
Coventry Health Care, Inc. Quarterly Data