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GuruFocus has detected 4 Warning Signs with Cenveo Inc $CVO.
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Cenveo Inc (NYSE:CVO)
Beneish M-Score
-1.74 (As of Today)

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.

Cenveo Inc has a M-score of -1.74 signals that the company is a manipulator.

CVO' s Beneish M-Score Range Over the Past 10 Years
Min: -3.98   Max: -1.65
Current: -1.74

-3.98
-1.65

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 -2.72.


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 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 * 0.9673+0.528 * 1.0146+0.404 * 0.9719+0.892 * 0.953+0.115 * 1.0309
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0087+4.679 * 0.1739-0.327 * 0.9945
=-1.74

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

This Year (Dec16) TTM:Last Year (Dec15) TTM:
Accounts Receivable was $234 Mil.
Revenue was 417.244 + 405.955 + 404.041 + 432.761 = $1,660 Mil.
Gross Profit was 63.62 + 70.222 + 68.563 + 70.85 = $273 Mil.
Total Current Assets was $383 Mil.
Total Assets was $913 Mil.
Property, Plant and Equipment(Net PPE) was $208 Mil.
Depreciation, Depletion and Amortization(DDA) was $47 Mil.
Selling, General & Admin. Expense(SGA) was $180 Mil.
Total Current Liabilities was $315 Mil.
Long-Term Debt was $987 Mil.
Net Income was -0.241 + 9.431 + 47.556 + 11.203 = $68 Mil.
Non Operating Income was -169.834 + 9.177 + 9.893 + 21.059 = $-130 Mil.
Cash Flow from Operations was 33.205 + 7.543 + 15.359 + -17.236 = $39 Mil.
Accounts Receivable was $254 Mil.
Revenue was 478.96 + 419.783 + 413.359 + 429.677 = $1,742 Mil.
Gross Profit was 78.088 + 72.374 + 69.547 + 70.894 = $291 Mil.
Total Current Assets was $479 Mil.
Total Assets was $1,082 Mil.
Property, Plant and Equipment(Net PPE) was $211 Mil.
Depreciation, Depletion and Amortization(DDA) was $50 Mil.
Selling, General & Admin. Expense(SGA) was $187 Mil.
Total Current Liabilities was $349 Mil.
Long-Term Debt was $1,203 Mil.



1. DSRI = Days Sales in Receivables Index

Measured as the ratio of days’ 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)
=(234.187 / 1660.001) / (254.042 / 1741.779)
=0.14107642 / 0.14585203
=0.9673

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)
=(290.903 / 1741.779) / (273.255 / 1660.001)
=0.16701487 / 0.16461135
=1.0146

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 - (383.245 + 207.679) / 912.959) / (1 - (478.739 + 210.578) / 1082.026)
=0.35273764 / 0.3629386
=0.9719

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
=1660.001 / 1741.779
=0.953

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))
=(49.689 / (49.689 + 210.578)) / (47.2 / (47.2 + 207.679))
=0.19091548 / 0.18518591
=1.0309

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)
=(179.525 / 1660.001) / (186.749 / 1741.779)
=0.10814753 / 0.10721739
=1.0087

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)
=((986.939 + 315.206) / 912.959) / ((1203.25 + 348.536) / 1082.026)
=1.42629078 / 1.43414853
=0.9945

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
=(67.949 - -129.705 - 38.871) / 912.959
=0.1739

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 -1.74 signals that the company is likely to be a manipulator.


Related Terms

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


Historical Data

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

Cenveo Inc Annual Data

Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15Dec16
DSRI 1.11160.76441.21680.98411.01470.93561.21110.8091.01720.9673
GMI 0.97021.00261.0920.98731.00671.01591.11461.0820.91731.0146
AQI 1.50450.81391.06980.87771.00851.00190.87181.13610.97220.9719
SGI 1.35431.02540.8170.99641.07950.94250.91391.10870.98890.953
DEPI 1.05130.88621.0240.94260.96960.89571.28430.73690.98811.0309
SGAI 0.89611.03041.05570.97680.96860.91021.11480.94990.96181.0087
LVGI 0.96831.19390.97851.12260.99851.07981.03821.08411.03910.9945
TATA -0.0177-0.1988-0.0795-0.16670.0984-0.1005-0.0868-0.07110.12630.1268
M-score -1.92-3.76-2.74-3.38-1.93-3.07-2.76-2.84-1.95-1.96

Cenveo Inc Quarterly Data

Sep14Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16Dec16
DSRI 1.06420.76660.91530.93330.85781.07340.89630.81650.90530.9673
GMI 1.09681.08011.04621.04160.97610.91890.9380.93580.96741.0146
AQI 0.93041.13611.04061.03191.14570.97221.02031.05380.94440.9719
SGI 1.01191.16991.08310.99950.99450.93710.97031.0021.00310.953
DEPI 1.19330.73690.94271.07470.75670.98810.77810.72890.93521.0309
SGAI 1.00480.95170.95030.92790.94250.960.96630.99881.01311.0087
LVGI 1.08841.08411.0791.0561.04271.03911.06921.02211.02020.9945
TATA 0.0055-0.1205-0.1103-0.1306-0.16620.17290.20850.19280.20540.1739
M-score -2.37-3.06-2.98-3.12-3.38-1.72-1.69-1.80-1.66-1.74
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