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CVS Health Corp (NYSE:CVS)
Beneish M-Score
-2.36 (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.

CVS Health Corp has a M-score of -2.36 suggests that the company is not a manipulator.

CVS' s 10-Year Beneish M-Score Range
Min: -3.17   Max: 0.22
Current: -2.36

-3.17
0.22

During the past 13 years, the highest Beneish M-Score of CVS Health Corp was 0.22. The lowest was -3.17. And the median was -2.33.


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 CVS Health Corp 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 * 1.2496+0.528 * 1.0204+0.404 * 0.9686+0.892 * 1.0784+0.115 * 0.981
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.3064+4.679 * -0.0155-0.327 * 1.1529
=-2.36

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.

This Year (Sep14) TTM:Last Year (Sep13) TTM:
Accounts Receivable was $10,828 Mil.
Revenue was 35021 + 34602 + 32689 + 32830 = $135,142 Mil.
Gross Profit was 6468 + 6324 + 5942 + 6339 = $25,073 Mil.
Total Current Assets was $25,337 Mil.
Total Assets was $73,576 Mil.
Property, Plant and Equipment(Net PPE) was $8,694 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,900 Mil.
Selling, General & Admin. Expense(SGA) was $16,378 Mil.
Total Current Liabilities was $18,213 Mil.
Long-Term Debt was $11,709 Mil.
Net Income was 948 + 1246 + 1129 + 1265 = $4,588 Mil.
Non Operating Income was -521 + 0 + 0 + 0 = $-521 Mil.
Cash Flow from Operations was 1645 + 897 + 2172 + 1538 = $6,252 Mil.
Accounts Receivable was $8,035 Mil.
Revenue was 31932 + 31248 + 30751 + 31381 = $125,312 Mil.
Gross Profit was 6027 + 5841 + 5577 + 6279 = $23,724 Mil.
Total Current Assets was $21,432 Mil.
Total Assets was $67,805 Mil.
Property, Plant and Equipment(Net PPE) was $8,749 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,868 Mil.
Selling, General & Admin. Expense(SGA) was $11,625 Mil.
Total Current Liabilities was $15,098 Mil.
Long-Term Debt was $8,819 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)
=(10828 / 135142) / (8035 / 125312)
=0.08012313 / 0.06411996
=1.2496

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)
=(6324 / 125312) / (6468 / 135142)
=0.18931946 / 0.18553078
=1.0204

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 - (25337 + 8694) / 73576) / (1 - (21432 + 8749) / 67805)
=0.53747146 / 0.55488533
=0.9686

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
=135142 / 125312
=1.0784

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))
=(1868 / (1868 + 8749)) / (1900 / (1900 + 8694))
=0.17594424 / 0.1793468
=0.981

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)
=(16378 / 135142) / (11625 / 125312)
=0.12119104 / 0.09276845
=1.3064

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)
=((11709 + 18213) / 73576) / ((8819 + 15098) / 67805)
=0.40668153 / 0.3527321
=1.1529

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
=(4588 - -521 - 6252) / 73576
=-0.0155

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.

CVS Health Corp has a M-score of -2.36 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 own currency.

CVS Health Corp Annual Data

Dec04Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13
DSRI 1.1360.86211.09331.10391.02590.92551.0980.9321.3086
GMI 0.98331.00210.97771.26981.00920.98191.09961.05110.9735
AQI 1.50370.89591.22492.69440.93880.99040.9990.97330.9297
SGI 1.15071.20961.18411.74181.1460.97521.11821.14961.0296
DEPI 1.06280.85951.07310.76721.16240.99420.96020.92570.9465
SGAI 1.03651.04371.02330.698401.03640.90370.93391.001
LVGI 1.15910.86671.18740.72781.01180.92871.03361.07221.124
TATA 0.0043-0.0181-0.0077-0.0029-0.0121-0.0217-0.0371-0.0371-0.0167
M-score -2.06-2.53-2.24-0.80-2.22-2.67-2.40-2.59-2.34

CVS Health Corp Quarterly Data

Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14
DSRI 0.89580.93490.9320.99021.09171.20151.30861.30951.2581.2496
GMI 1.10591.09181.05111.00030.96790.95750.97350.99391.01251.0204
AQI 0.99151.00370.97331.0040.99030.95760.92970.95290.95980.9686
SGI 1.16031.16141.14961.09691.0611.04381.02961.04571.06831.0784
DEPI 0.93560.90140.92570.90480.92070.95630.94651.00570.99550.981
SGAI 0.88440.6640.45540.47930.4991.00812.0531.97961.93551.3064
LVGI 1.01781.00511.07220.99590.97641.0171.1241.16921.19611.1529
TATA -0.0477-0.0301-0.0371-0.0172-0.0098-0.0175-0.0167-0.0213-0.0196-0.0155
M-score -2.60-2.44-2.50-2.40-2.32-2.39-2.52-2.50-2.51-2.36
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