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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 -1.62. The lowest was -4.34. And the median was -2.72.
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 * 0.9479||+||0.528 * 1.054||+||0.404 * 1.0406||+||0.892 * 1.0458||+||0.115 * 0.9115|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.961||+||4.679 * -0.0674||-||0.327 * 1.079|
|This Year (Mar15) TTM:||Last Year (Mar14) TTM:|
|Accounts Receivable was $271 Mil.|
Revenue was 475.105 + 498.935 + 480.576 + 479.41 = $1,934 Mil.
Gross Profit was 77.217 + 70.157 + 70.434 + 79.974 = $298 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 $63 Mil.
Selling, General & Admin. Expense(SGA) was $214 Mil.
Total Current Liabilities was $337 Mil.
Long-Term Debt was $1,246 Mil.
Net Income was -7.679 + -18.499 + -10.893 + -38.637 = $-76 Mil.
Non Operating Income was 0.216 + 0.023 + 5.733 + -26.692 = $-21 Mil.
Cash Flow from Operations was -7.444 + 31.176 + 19.853 + -22.033 = $22 Mil.
|Accounts Receivable was $274 Mil.
Revenue was 490.119 + 509.873 + 442.781 + 406.54 = $1,849 Mil.
Gross Profit was 74.962 + 80.334 + 75.425 + 69.405 = $300 Mil.
Total Current Assets was $511 Mil.
Total Assets was $1,207 Mil.
Property, Plant and Equipment(Net PPE) was $300 Mil.
Depreciation, Depletion and Amortization(DDA) was $61 Mil.
Selling, General & Admin. Expense(SGA) was $213 Mil.
Total Current Liabilities was $366 Mil.
Long-Term Debt was $1,194 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)|
|=||(271.409 / 1934.026)||/||(273.783 / 1849.313)|
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)|
|=||(70.157 / 1849.313)||/||(77.217 / 1934.026)|
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 - (472.264 + 275.428) / 1135.507)||/||(1 - (510.796 + 299.915) / 1206.784)|
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))|
|=||(60.921 / (60.921 + 299.915))||/||(62.615 / (62.615 + 275.428))|
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)|
|=||(214.297 / 1934.026)||/||(213.234 / 1849.313)|
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)|
|=||((1246.274 + 337.135) / 1135.507)||/||((1193.765 + 365.782) / 1206.784)|
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|
|=||(-75.708 - -20.72||-||21.552)||/||1135.507|
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 -2.79 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