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CVS Health Corp (NYSE:CVS)
Beneish M-Score
-2.56 (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 -2.56 suggests that the company is not a manipulator.

CVS' s 10-Year Beneish M-Score Range
Min: -3.07   Max: -0.79
Current: -2.56

-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 -2.35.


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 * 1.0094+0.528 * 1.0308+0.404 * 1.0104+0.892 * 1.0994+0.115 * 0.9951
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.957+4.679 * -0.04-0.327 * 1.047
=-2.56

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

This Year (Dec14) TTM:Last Year (Dec13) TTM:
Accounts Receivable was $9,687 Mil.
Revenue was 37055 + 35021 + 34602 + 32689 = $139,367 Mil.
Gross Profit was 6633 + 6468 + 6324 + 5942 = $25,367 Mil.
Total Current Assets was $25,983 Mil.
Total Assets was $74,252 Mil.
Property, Plant and Equipment(Net PPE) was $8,843 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,931 Mil.
Selling, General & Admin. Expense(SGA) was $16,568 Mil.
Total Current Liabilities was $19,027 Mil.
Long-Term Debt was $11,695 Mil.
Net Income was 1321 + 948 + 1246 + 1129 = $4,644 Mil.
Non Operating Income was 0 + -521 + 0 + 0 = $-521 Mil.
Cash Flow from Operations was 3423 + 1645 + 897 + 2172 = $8,137 Mil.
Accounts Receivable was $8,729 Mil.
Revenue was 32830 + 31932 + 31248 + 30751 = $126,761 Mil.
Gross Profit was 6339 + 6027 + 5841 + 5577 = $23,784 Mil.
Total Current Assets was $25,325 Mil.
Total Assets was $71,526 Mil.
Property, Plant and Equipment(Net PPE) was $8,615 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,870 Mil.
Selling, General & Admin. Expense(SGA) was $15,747 Mil.
Total Current Liabilities was $15,425 Mil.
Long-Term Debt was $12,841 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)
=(9687 / 139367) / (8729 / 126761)
=0.06950713 / 0.06886187
=1.0094

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)
=(6468 / 126761) / (6633 / 139367)
=0.18762869 / 0.18201583
=1.0308

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 - (25983 + 8843) / 74252) / (1 - (25325 + 8615) / 71526)
=0.5309756 / 0.52548724
=1.0104

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
=139367 / 126761
=1.0994

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))
=(1870 / (1870 + 8615)) / (1931 / (1931 + 8843))
=0.17835002 / 0.17922777
=0.9951

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)
=(16568 / 139367) / (15747 / 126761)
=0.11888037 / 0.12422591
=0.957

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)
=((11695 + 19027) / 74252) / ((12841 + 15425) / 71526)
=0.41375316 / 0.39518497
=1.047

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
=(4644 - -521 - 8137) / 74252
=-0.04

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 -2.56 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

Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14
DSRI 0.86211.09331.10391.02590.92551.0980.9321.30861.0094
GMI 1.00210.97771.26981.00920.98191.09961.05110.97351.0308
AQI 0.89591.22492.69440.93880.99040.9990.97330.92971.0104
SGI 1.20961.18411.74181.1460.97521.11821.14961.02961.0994
DEPI 0.85951.07310.76721.16240.99420.96020.92570.94650.9951
SGAI 1.04371.02330.698401.03640.90370.93391.0010.957
LVGI 0.86671.18740.72781.01180.92871.03361.07221.1241.047
TATA -0.0181-0.0077-0.0029-0.0121-0.0217-0.0371-0.0371-0.0167-0.04
M-score -2.53-2.24-0.80-2.22-2.67-2.40-2.59-2.34-2.56

CVS Health Corp Quarterly Data

Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14Dec14
DSRI 0.93490.9320.99021.09171.20151.30861.30951.2581.24961.0094
GMI 1.09181.05111.00030.96790.95750.97350.99391.01251.02041.0308
AQI 1.00370.97331.0040.99030.95760.92970.95290.95980.96861.0104
SGI 1.16141.14961.09691.0611.04381.02961.04571.06831.07841.0994
DEPI 0.90140.92570.90480.92070.95630.94651.00570.99550.9810.9951
SGAI 0.6640.45540.47930.4991.00812.0531.97961.93551.30640.957
LVGI 1.00511.07220.99590.97641.0171.1241.16921.19611.15291.047
TATA -0.0301-0.0371-0.0172-0.0098-0.0175-0.0167-0.0213-0.0196-0.0155-0.04
M-score -2.44-2.50-2.40-2.32-2.39-2.52-2.50-2.51-2.36-2.56
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