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GuruFocus has detected 3 Warning Signs with Cenveo Inc $CVO.
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Cenveo Inc (NYSE:CVO)
Beneish M-Score
-2.69 (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 -2.69 suggests that the company is not a manipulator.

CVO' s Beneish M-Score Range Over the Past 10 Years
Min: -4.16   Max: -1.26
Current: -2.69

-4.16
-1.26

During the past 13 years, the highest Beneish M-Score of Cenveo Inc was -1.26. The lowest was -4.16. And the median was -2.69.


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 * 0.9053+0.528 * 0.9674+0.404 * 0.9444+0.892 * 1.0031+0.115 * 0.9352
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0131+4.679 * -0.0156-0.327 * 1.0202
=-2.69

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

This Year (Sep16) TTM:Last Year (Sep15) TTM:
Accounts Receivable was $223 Mil.
Revenue was 405.955 + 404.041 + 432.761 + 478.96 = $1,722 Mil.
Gross Profit was 70.222 + 68.563 + 70.85 + 78.088 = $288 Mil.
Total Current Assets was $379 Mil.
Total Assets was $912 Mil.
Property, Plant and Equipment(Net PPE) was $209 Mil.
Depreciation, Depletion and Amortization(DDA) was $50 Mil.
Selling, General & Admin. Expense(SGA) was $188 Mil.
Total Current Liabilities was $314 Mil.
Long-Term Debt was $987 Mil.
Net Income was 9.431 + 47.556 + 11.203 + -17.524 = $51 Mil.
Non Operating Income was 9.177 + 9.893 + 21.059 + 1.73 = $42 Mil.
Cash Flow from Operations was 7.543 + 15.359 + -17.236 + 17.349 = $23 Mil.
Accounts Receivable was $245 Mil.
Revenue was 419.783 + 413.359 + 429.677 + 453.522 = $1,716 Mil.
Gross Profit was 72.374 + 69.547 + 70.894 + 64.664 = $277 Mil.
Total Current Assets was $488 Mil.
Total Assets was $1,136 Mil.
Property, Plant and Equipment(Net PPE) was $220 Mil.
Depreciation, Depletion and Amortization(DDA) was $48 Mil.
Selling, General & Admin. Expense(SGA) was $185 Mil.
Total Current Liabilities was $350 Mil.
Long-Term Debt was $1,238 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)
=(222.668 / 1721.717) / (245.203 / 1716.341)
=0.12932904 / 0.1428638
=0.9053

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)
=(277.479 / 1716.341) / (287.723 / 1721.717)
=0.16166892 / 0.16711399
=0.9674

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 - (378.677 + 208.71) / 912.237) / (1 - (487.898 + 219.563) / 1135.715)
=0.35610264 / 0.37707876
=0.9444

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
=1721.717 / 1716.341
=1.0031

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))
=(48.058 / (48.058 + 219.563)) / (49.601 / (49.601 + 208.71))
=0.17957485 / 0.19202047
=0.9352

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)
=(187.723 / 1721.717) / (184.719 / 1716.341)
=0.10903244 / 0.10762372
=1.0131

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)
=((986.955 + 314.291) / 912.237) / ((1237.988 + 349.971) / 1135.715)
=1.42643414 / 1.39820201
=1.0202

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
=(50.666 - 41.859 - 23.015) / 912.237
=-0.0156

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 -2.69 suggests that the company will not 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

Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15
DSRI 0.97691.11160.76441.21680.98411.01470.93561.21110.8091.0172
GMI 0.86970.97021.00261.0920.98731.00671.01591.11461.0820.9173
AQI 0.92371.50450.81391.06980.87771.00851.00190.87181.13610.9741
SGI 0.94761.35431.02540.8170.99641.07950.94250.91391.10870.9889
DEPI 0.94571.05130.88621.0240.94260.96960.89571.28430.73690.9881
SGAI 0.91410.89611.03041.05570.97680.96860.91021.11480.94990.9618
LVGI 0.90380.96831.19390.97851.12260.99851.07981.03821.08411.0397
TATA 0.1267-0.0177-0.1988-0.0795-0.16670.0984-0.1005-0.0868-0.0711-0.0602
M-score -2.01-1.92-3.76-2.74-3.38-1.93-3.07-2.76-2.84-2.82

Cenveo Inc Quarterly Data

Jun14Sep14Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16
DSRI 1.11691.06420.76660.91530.93330.85781.07340.89630.81650.9053
GMI 1.09541.09681.08011.04621.04160.97610.91890.9380.93580.9674
AQI 0.87550.93041.13611.04061.03191.14570.97411.02031.05380.9444
SGI 1.01941.01191.16991.08310.99950.99450.93710.97031.0021.0031
DEPI 1.21581.19330.73690.94271.07470.75670.98810.77810.72890.9352
SGAI 1.07031.00480.95170.95030.92790.94250.960.96630.99881.0131
LVGI 1.05291.08841.08411.0791.0561.04271.03971.06921.02211.0202
TATA -0.00970.0055-0.1205-0.1103-0.1306-0.1662-0.0134-0.008-0.031-0.0156
M-score -2.41-2.37-3.06-2.98-3.12-3.38-2.59-2.71-2.84-2.69
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