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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 -1.26. The lowest was -4.16. And the median was -2.69.
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 * 0.8725||+||0.528 * 0.9402||+||0.404 * 1.0203||+||0.892 * 0.9968||+||0.115 * 0.7781|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.966||+||4.679 * -0.1174||-||0.327 * 1.0692|
|This Year (Mar16) TTM:||Last Year (Mar15) TTM:|
|Accounts Receivable was $236 Mil.|
Revenue was 432.761 + 478.96 + 419.783 + 460.857 = $1,792 Mil.
Gross Profit was 70.85 + 78.088 + 72.374 + 76.752 = $298 Mil.
Total Current Assets was $399 Mil.
Total Assets was $931 Mil.
Property, Plant and Equipment(Net PPE) was $207 Mil.
Depreciation, Depletion and Amortization(DDA) was $50 Mil.
Selling, General & Admin. Expense(SGA) was $192 Mil.
Total Current Liabilities was $377 Mil.
Long-Term Debt was $1,011 Mil.
Net Income was 11.203 + -17.524 + -3.243 + -2.405 = $-12 Mil.
Non Operating Income was 21.059 + 153.732 + -48.858 + -51.029 = $75 Mil.
Cash Flow from Operations was -17.236 + 17.349 + 16.474 + 5.815 = $22 Mil.
|Accounts Receivable was $271 Mil.
Revenue was 429.677 + 453.522 + 435.595 + 479.41 = $1,798 Mil.
Gross Profit was 70.894 + 64.664 + 65.636 + 79.974 = $281 Mil.
Total Current Assets was $472 Mil.
Total Assets was $1,136 Mil.
Property, Plant and Equipment(Net PPE) was $275 Mil.
Depreciation, Depletion and Amortization(DDA) was $49 Mil.
Selling, General & Admin. Expense(SGA) was $199 Mil.
Total Current Liabilities was $337 Mil.
Long-Term Debt was $1,246 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)|
|=||(236.038 / 1792.361)||/||(271.409 / 1798.204)|
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)|
|=||(78.088 / 1798.204)||/||(70.85 / 1792.361)|
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 - (399.358 + 207.192) / 930.96)||/||(1 - (472.264 + 275.428) / 1135.507)|
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))|
|=||(48.867 / (48.867 + 275.428))||/||(49.761 / (49.761 + 207.192))|
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)|
|=||(191.86 / 1792.361)||/||(199.251 / 1798.204)|
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)|
|=||((1011.446 + 376.568) / 930.96)||/||((1246.274 + 337.135) / 1135.507)|
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|
|=||(-11.969 - 74.904||-||22.402)||/||930.96|
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 -3.22 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