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CVS Health Corp (NYSE:CVS)
Beneish M-Score
-2.43 (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 -2.43 suggests that the company is not a manipulator.

CVS' s 10-Year Beneish M-Score Range
Min: -3.17   Max: 0.22
Current: -2.43

-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 * 1.2582+0.528 * 1.0124+0.404 * 0.9598+0.892 * 1.0682+0.115 * 0.9955
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.4678+4.679 * -0.0196-0.327 * 1.1961
=-2.43

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

This Year (Jun14) TTM:Last Year (Jun13) TTM:
Accounts Receivable was $9,533 Mil.
Revenue was 34602 + 32689 + 32782 + 31968 = $132,041 Mil.
Gross Profit was 6324 + 5942 + 6331 + 6035 = $24,632 Mil.
Total Current Assets was $24,138 Mil.
Total Assets was $72,593 Mil.
Property, Plant and Equipment(Net PPE) was $8,820 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,884 Mil.
Selling, General & Admin. Expense(SGA) was $12,155 Mil.
Total Current Liabilities was $16,629 Mil.
Long-Term Debt was $12,252 Mil.
Net Income was 1246 + 1129 + 1261 + 1254 = $4,890 Mil.
Non Operating Income was 0 + 0 + 0 + 0 = $0 Mil.
Cash Flow from Operations was 897 + 2172 + 1538 + 1703 = $6,310 Mil.
Accounts Receivable was $7,093 Mil.
Revenue was 31248 + 30751 + 31381 + 30227 = $123,607 Mil.
Gross Profit was 5841 + 5577 + 6279 + 5647 = $23,344 Mil.
Total Current Assets was $19,869 Mil.
Total Assets was $66,284 Mil.
Property, Plant and Equipment(Net PPE) was $8,708 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,850 Mil.
Selling, General & Admin. Expense(SGA) was $7,752 Mil.
Total Current Liabilities was $12,690 Mil.
Long-Term Debt was $9,358 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)
=(9533 / 132041) / (7093 / 123607)
=0.07219727 / 0.05738348
=1.2582

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)
=(5942 / 123607) / (6324 / 132041)
=0.18885662 / 0.18654812
=1.0124

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 - (24138 + 8820) / 72593) / (1 - (19869 + 8708) / 66284)
=0.54598928 / 0.56887032
=0.9598

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
=132041 / 123607
=1.0682

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))
=(1850 / (1850 + 8708)) / (1884 / (1884 + 8820))
=0.17522258 / 0.17600897
=0.9955

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)
=(12155 / 132041) / (7752 / 123607)
=0.09205474 / 0.06271489
=1.4678

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)
=((12252 + 16629) / 72593) / ((9358 + 12690) / 66284)
=0.39784828 / 0.33262929
=1.1961

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
=(4890 - 0 - 6310) / 72593
=-0.0196

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 -2.43 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

Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14
DSRI 0.99770.89580.93490.9320.99021.09171.20121.30871.30971.2582
GMI 1.10661.10591.09181.05111.00030.96790.95750.97340.99381.0124
AQI 0.99140.99151.00370.97331.0040.99030.95760.92970.95290.9598
SGI 1.14491.16031.16141.14961.09691.0611.04411.02951.04561.0682
DEPI 0.94630.93560.90140.92570.90480.92070.95630.94651.00570.9955
SGAI 0.8930.88440.6640.45540.47930.4990.6721.54811.49381.4678
LVGI 1.06931.01781.00511.07220.99590.97641.0171.1241.16921.1961
TATA -0.0493-0.0477-0.0301-0.0371-0.0172-0.0098-0.0174-0.0166-0.0212-0.0196
M-score -2.54-2.60-2.44-2.50-2.40-2.32-2.33-2.43-2.42-2.43
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