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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 Cenveo Inc was -1.65. The lowest was -3.98. And the median was -2.75.
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 Cenveo 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 * 1.019||+||0.528 * 0.9249||+||0.404 * 0.9741||+||0.892 * 0.9871||+||0.115 * 0.9881|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9608||+||4.679 * -0.108||-||0.327 * 1.0397|
|This Year (Dec15) TTM:||Last Year (Dec14) TTM:|
|Accounts Receivable was $254 Mil.|
Revenue was 478.96 + 419.783 + 460.857 + 475.105 = $1,835 Mil.
Gross Profit was 78.088 + 72.374 + 76.752 + 77.217 = $304 Mil.
Total Current Assets was $477 Mil.
Total Assets was $1,080 Mil.
Property, Plant and Equipment(Net PPE) was $211 Mil.
Depreciation, Depletion and Amortization(DDA) was $50 Mil.
Selling, General & Admin. Expense(SGA) was $197 Mil.
Total Current Liabilities was $346 Mil.
Long-Term Debt was $1,203 Mil.
Net Income was -17.524 + -3.243 + -2.405 + -7.679 = $-31 Mil.
Non Operating Income was 153.732 + -48.858 + -51.029 + -0.216 = $54 Mil.
Cash Flow from Operations was 17.349 + 16.474 + 5.815 + -7.444 = $32 Mil.
|Accounts Receivable was $253 Mil.
Revenue was 453.522 + 435.595 + 479.41 + 490.119 = $1,859 Mil.
Gross Profit was 64.664 + 65.636 + 79.974 + 74.962 = $285 Mil.
Total Current Assets was $484 Mil.
Total Assets was $1,136 Mil.
Property, Plant and Equipment(Net PPE) was $228 Mil.
Depreciation, Depletion and Amortization(DDA) was $53 Mil.
Selling, General & Admin. Expense(SGA) was $208 Mil.
Total Current Liabilities was $361 Mil.
Long-Term Debt was $1,207 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)|
|=||(254.042 / 1834.705)||/||(252.555 / 1858.646)|
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)|
|=||(72.374 / 1858.646)||/||(78.088 / 1834.705)|
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 - (476.628 + 210.578) / 1079.915)||/||(1 - (483.915 + 227.823) / 1135.721)|
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))|
|=||(52.97 / (52.97 + 227.823))||/||(49.689 / (49.689 + 210.578))|
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)|
|=||(196.882 / 1834.705)||/||(207.588 / 1858.646)|
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)|
|=||((1203.25 + 346.425) / 1079.915)||/||((1206.508 + 360.947) / 1135.721)|
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|
|=||(-30.851 - 53.629||-||32.194)||/||1079.915|
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.
Cenveo Inc has a M-score of -3.04 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
Cenveo Inc Annual Data
Cenveo Inc Quarterly Data