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CVS Health Corp (NYSE:CVS)
Beneish M-Score
-2.50 (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 -2.50 suggests that the company is not a manipulator.

CVS' s Beneish M-Score Range Over the Past 10 Years
Min: -3.07   Max: -0.79
Current: -2.5

-3.07
-0.79

During the past 13 years, the highest Beneish M-Score of CVS Health Corp was -0.79. The lowest was -3.07. And the median was -2.39.


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 * 1.0711+0.528 * 1.0704+0.404 * 1.0498+0.892 * 1.104+0.115 * 1.0311
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9299+4.679 * -0.0347-0.327 * 1.2833
=-2.50

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

This Year (Sep15) TTM:Last Year (Sep14) TTM:
Accounts Receivable was $12,804 Mil.
Revenue was 38644 + 37169 + 36332 + 37055 = $149,200 Mil.
Gross Profit was 6661 + 6402 + 6164 + 6633 = $25,860 Mil.
Total Current Assets was $30,753 Mil.
Total Assets was $92,362 Mil.
Property, Plant and Equipment(Net PPE) was $9,494 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,999 Mil.
Selling, General & Admin. Expense(SGA) was $16,814 Mil.
Total Current Liabilities was $21,434 Mil.
Long-Term Debt was $26,771 Mil.
Net Income was 1246 + 1272 + 1221 + 1321 = $5,060 Mil.
Non Operating Income was 0 + 0 + 0 + 0 = $0 Mil.
Cash Flow from Operations was 1820 + 1037 + 1984 + 3423 = $8,264 Mil.
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.



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)
=(12804 / 149200) / (10828 / 135142)
=0.08581769 / 0.08012313
=1.0711

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)
=(6402 / 135142) / (6661 / 149200)
=0.18553078 / 0.1733244
=1.0704

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 - (30753 + 9494) / 92362) / (1 - (25337 + 8694) / 73576)
=0.5642472 / 0.53747146
=1.0498

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
=149200 / 135142
=1.104

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))
=(1900 / (1900 + 8694)) / (1999 / (1999 + 9494))
=0.1793468 / 0.17393196
=1.0311

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)
=(16814 / 149200) / (16378 / 135142)
=0.11269437 / 0.12119104
=0.9299

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)
=((26771 + 21434) / 92362) / ((11709 + 18213) / 73576)
=0.52191377 / 0.40668153
=1.2833

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
=(5060 - 0 - 8264) / 92362
=-0.0347

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 -2.50 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

Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15
DSRI 1.09331.10391.02590.92551.09820.93191.30861.00941.1157
GMI 0.97771.26981.00920.98191.09941.05130.97351.03081.0518
AQI 1.22492.69440.93880.99040.9990.97330.92971.00971.0751
SGI 1.18411.74181.1460.97521.1181.14981.02961.09941.0999
DEPI 1.07310.76721.16240.99420.96020.92570.94650.99511.0235
SGAI 1.02330.698401.03640.90390.93371.0010.9570.9369
LVGI 1.18740.72781.01180.92871.03361.07221.1241.04571.2773
TATA -0.0077-0.0029-0.0121-0.0217-0.0371-0.0371-0.0167-0.0401-0.0339
M-score -2.24-0.80-2.22-2.67-2.40-2.59-2.34-2.56-2.46

CVS Health Corp Quarterly Data

Sep13Dec13Mar14Jun14Sep14Dec14Mar15Jun15Sep15Dec15
DSRI 1.20131.30861.30951.2581.24961.00941.00651.03641.07111.1157
GMI 0.95770.97350.99391.01251.02041.03081.04871.0581.07041.0518
AQI 0.95760.92970.95290.95980.96861.00970.97880.96271.04981.0751
SGI 1.0441.02961.04571.06831.07841.09941.11121.10241.1041.0999
DEPI 0.95630.94651.00570.99550.9810.99510.97560.99261.03111.0235
SGAI 2.33260.67290.6590.65150.56450.9570.95130.94540.92990.9369
LVGI 1.0171.1241.16921.19611.15291.04571.06451.07781.28331.2773
TATA -0.0175-0.0167-0.0213-0.0196-0.0155-0.0401-0.0364-0.0376-0.0347-0.0339
M-score -2.62-2.28-2.27-2.29-2.23-2.56-2.54-2.53-2.50-2.46
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