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CVS Caremark 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 Caremark 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: -3.07   Max: -0.79
Current: -2.43

-3.07
-0.79

During the past 13 years, the highest Beneish M-Score of CVS Caremark Corp was -0.79. The lowest was -3.07. And the median was -2.31.


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 * 1.3086+0.528 * 0.9735+0.404 * 0.9297+0.892 * 1.0296+0.115 * 0.9465
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.5478+4.679 * -0.0167-0.327 * 1.124
=-2.43

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

This Year (Dec13) TTM:Last Year (Dec12) TTM:
Accounts Receivable was $8,729 Mil.
Revenue was 32782 + 31968 + 31248 + 30763 = $126,761 Mil.
Gross Profit was 6331 + 6035 + 5836 + 5582 = $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 $11,872 Mil.
Total Current Liabilities was $15,425 Mil.
Long-Term Debt was $12,841 Mil.
Net Income was 1261 + 1254 + 1121 + 956 = $4,592 Mil.
Non Operating Income was 0 + 0 + 0 + 0 = $0 Mil.
Cash Flow from Operations was 1538 + 1703 + 902 + 1640 = $5,783 Mil.
Accounts Receivable was $6,479 Mil.
Revenue was 31381 + 30227 + 30714 + 30798 = $123,120 Mil.
Gross Profit was 6279 + 5647 + 5449 + 5113 = $22,488 Mil.
Total Current Assets was $20,161 Mil.
Total Assets was $66,221 Mil.
Property, Plant and Equipment(Net PPE) was $8,632 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,753 Mil.
Selling, General & Admin. Expense(SGA) was $7,450 Mil.
Total Current Liabilities was $14,150 Mil.
Long-Term Debt was $9,133 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)
=(8729 / 126761) / (6479 / 123120)
=0.06886187 / 0.05262346
=1.3086

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)
=(6035 / 123120) / (6331 / 126761)
=0.18265107 / 0.18762869
=0.9735

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 - (25325 + 8615) / 71526) / (1 - (20161 + 8632) / 66221)
=0.52548724 / 0.56519835
=0.9297

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
=126761 / 123120
=1.0296

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))
=(1753 / (1753 + 8632)) / (1870 / (1870 + 8615))
=0.16880116 / 0.17835002
=0.9465

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)
=(11872 / 126761) / (7450 / 123120)
=0.09365657 / 0.06051007
=1.5478

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)
=((12841 + 15425) / 71526) / ((9133 + 14150) / 66221)
=0.39518497 / 0.35159542
=1.124

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
=(4592 - 0 - 5783) / 71526
=-0.0167

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 -2.43 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 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

Sep11Dec11Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13
DSRI 1.0811.10130.99770.89580.93490.9320.99011.09161.2011.3086
GMI 1.06111.09721.10661.10591.09181.05111.00020.96790.95760.9735
AQI 0.98920.9990.99140.99151.00370.97331.0040.99030.95760.9297
SGI 1.0681.11481.14491.16031.16141.14961.0971.06111.04421.0296
DEPI 0.97380.96020.94630.93560.90140.92570.90480.92070.95630.9465
SGAI 1.29070.90630.8930.88440.6640.45540.47920.49890.67191.5478
LVGI 1.04771.03361.06931.01781.00511.07220.99590.97641.0171.124
TATA -0.0519-0.0371-0.0493-0.0477-0.0301-0.0371-0.0171-0.0098-0.0174-0.0167
M-score -2.63-2.41-2.54-2.60-2.44-2.50-2.40-2.32-2.33-2.43
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