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CVS Caremark Corp (NYSE:CVS)
Beneish M-Score
-2.42 (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 Caremark Corp has a M-score of -2.42 suggests that the company is not a manipulator.

CVS' s 10-Year Beneish M-Score Range
Min: -3.17   Max: 0.22
Current: -2.42

-3.17
0.22

During the past 13 years, the highest Beneish M-Score of CVS Caremark Corp was 0.22. The lowest was -3.17. And the median was -2.32.


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 Caremark 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 * 1.3097+0.528 * 0.994+0.404 * 0.9529+0.892 * 1.0456+0.115 * 1.0057
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.4936+4.679 * -0.0213-0.327 * 1.1692
=-2.42

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

This Year (Mar14) TTM:Last Year (Mar13) TTM:
Accounts Receivable was $9,086 Mil.
Revenue was 32689 + 32782 + 31968 + 31248 = $128,687 Mil.
Gross Profit was 5942 + 6331 + 6035 + 5836 = $24,144 Mil.
Total Current Assets was $24,460 Mil.
Total Assets was $72,822 Mil.
Property, Plant and Equipment(Net PPE) was $8,676 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,845 Mil.
Selling, General & Admin. Expense(SGA) was $11,907 Mil.
Total Current Liabilities was $16,213 Mil.
Long-Term Debt was $12,845 Mil.
Net Income was 1129 + 1261 + 1254 + 1121 = $4,765 Mil.
Non Operating Income was 0 + 0 + 0 + 0 = $0 Mil.
Cash Flow from Operations was 2172 + 1538 + 1703 + 902 = $6,315 Mil.
Accounts Receivable was $6,635 Mil.
Revenue was 30751 + 31381 + 30227 + 30714 = $123,073 Mil.
Gross Profit was 5577 + 6279 + 5647 + 5449 = $22,952 Mil.
Total Current Assets was $19,727 Mil.
Total Assets was $66,068 Mil.
Property, Plant and Equipment(Net PPE) was $8,556 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,832 Mil.
Selling, General & Admin. Expense(SGA) was $7,624 Mil.
Total Current Liabilities was $13,195 Mil.
Long-Term Debt was $9,352 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)
=(9086 / 128687) / (6635 / 123073)
=0.07060542 / 0.05391109
=1.3097

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)
=(6331 / 123073) / (5942 / 128687)
=0.18649094 / 0.18761802
=0.994

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 - (24460 + 8676) / 72822) / (1 - (19727 + 8556) / 66068)
=0.54497267 / 0.57191076
=0.9529

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
=128687 / 123073
=1.0456

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))
=(1832 / (1832 + 8556)) / (1845 / (1845 + 8676))
=0.17635734 / 0.17536356
=1.0057

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)
=(11907 / 128687) / (7624 / 123073)
=0.09252683 / 0.06194697
=1.4936

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)
=((12845 + 16213) / 72822) / ((9352 + 13195) / 66068)
=0.39902777 / 0.3412696
=1.1692

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
=(4765 - 0 - 6315) / 72822
=-0.0213

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 Caremark Corp has a M-score of -2.42 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 Caremark 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 Caremark Corp Quarterly Data

Dec11Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14
DSRI 1.10130.99770.89580.93490.9320.99021.09171.20121.30871.3097
GMI 1.09721.10661.10591.09181.05111.00030.96810.95770.97360.994
AQI 0.9990.99140.99151.00370.97331.0040.99030.95760.92970.9529
SGI 1.11481.14491.16031.16141.14961.09691.0611.04411.02951.0456
DEPI 0.96020.94630.93560.90140.92570.90480.92070.95630.94651.0057
SGAI 0.90630.8930.88440.6640.45540.47930.49890.6721.54791.4936
LVGI 1.03361.06931.01781.00511.07220.99590.97641.0171.1241.1692
TATA -0.0371-0.0493-0.0477-0.0301-0.0371-0.0172-0.0098-0.0174-0.0167-0.0213
M-score -2.41-2.54-2.60-2.44-2.50-2.40-2.32-2.33-2.43-2.42
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