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GuruFocus has detected 4 Warning Signs with Cenveo Inc $CVO.
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Cenveo Inc (NYSE:CVO)
Beneish M-Score
-1.82 (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.

Cenveo Inc has a M-score of -1.82 signals that the company is a manipulator.

CVO' s Beneish M-Score Range Over the Past 10 Years
Min: -4.16   Max: -1.26
Current: -1.82

-4.16
-1.26

During the past 13 years, the highest Beneish M-Score of Cenveo Inc was -1.26. The lowest was -4.16. And the median was -2.56.


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 Cenveo Inc 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 * 0.9128+0.528 * 1.0017+0.404 * 1.0541+0.892 * 0.918+0.115 * 1.0427
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.031+4.679 * 0.1674-0.327 * 0.9751
=-1.82

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

This Year (Mar17) TTM:Last Year (Mar16) TTM:
Accounts Receivable was $198 Mil.
Revenue was 374.506 + 417.244 + 405.955 + 404.041 = $1,602 Mil.
Gross Profit was 64.134 + 63.62 + 70.222 + 68.563 = $267 Mil.
Total Current Assets was $347 Mil.
Total Assets was $873 Mil.
Property, Plant and Equipment(Net PPE) was $206 Mil.
Depreciation, Depletion and Amortization(DDA) was $47 Mil.
Selling, General & Admin. Expense(SGA) was $177 Mil.
Total Current Liabilities was $244 Mil.
Long-Term Debt was $1,025 Mil.
Net Income was -8.692 + -0.241 + 9.431 + 47.556 = $48 Mil.
Non Operating Income was 0.182 + -169.834 + 9.177 + 9.893 = $-151 Mil.
Cash Flow from Operations was -6.381 + 33.205 + 7.543 + 18.13 = $52 Mil.
Accounts Receivable was $236 Mil.
Revenue was 432.761 + 478.96 + 419.783 + 413.359 = $1,745 Mil.
Gross Profit was 70.85 + 78.088 + 72.374 + 69.547 = $291 Mil.
Total Current Assets was $399 Mil.
Total Assets was $931 Mil.
Property, Plant and Equipment(Net PPE) was $207 Mil.
Depreciation, Depletion and Amortization(DDA) was $50 Mil.
Selling, General & Admin. Expense(SGA) was $187 Mil.
Total Current Liabilities was $377 Mil.
Long-Term Debt was $1,011 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)
=(197.778 / 1601.746) / (236.038 / 1744.863)
=0.12347651 / 0.13527595
=0.9128

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)
=(290.859 / 1744.863) / (266.539 / 1601.746)
=0.16669446 / 0.16640529
=1.0017

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 - (346.554 + 205.896) / 873.206) / (1 - (399.358 + 207.192) / 930.96)
=0.36733142 / 0.34846825
=1.0541

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
=1601.746 / 1744.863
=0.918

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))
=(49.761 / (49.761 + 207.192)) / (46.965 / (46.965 + 205.896))
=0.19365798 / 0.18573445
=1.0427

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)
=(176.827 / 1601.746) / (186.831 / 1744.863)
=0.1103964 / 0.10707488
=1.031

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)
=((1025.26 + 244.262) / 873.206) / ((1011.446 + 376.568) / 930.96)
=1.45386312 / 1.49094913
=0.9751

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
=(48.054 - -150.582 - 52.497) / 873.206
=0.1674

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.

Cenveo Inc has a M-score of -1.82 signals that the company is likely to 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 local exchange's currency.

Cenveo Inc Annual Data

Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15Dec16
DSRI 1.11160.76441.21680.98411.01470.92221.22880.76661.07340.9673
GMI 0.97261.00011.0920.98731.00671.0091.12221.08010.91891.0146
AQI 1.50450.81391.06980.87771.00851.00190.87181.13610.97220.9719
SGI 1.35431.02540.8170.99641.07950.95620.90081.16990.93710.953
DEPI 1.05130.88621.0240.94260.96960.89571.28430.73690.98811.0309
SGAI 0.89611.03041.05570.97680.96860.90281.1240.95170.961.0087
LVGI 0.96831.19390.97851.12260.99851.07981.03821.08411.03910.9945
TATA -0.0175-0.1988-0.0795-0.16670.1421-0.1005-0.0868-0.12050.17290.1739
M-score -1.92-3.76-2.74-3.38-1.72-3.08-2.75-3.06-1.72-1.74

Cenveo Inc Quarterly Data

Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16Dec16Mar17
DSRI 0.76660.91530.93330.85781.07340.89630.81650.90530.96730.9128
GMI 1.08011.04621.04160.97610.91890.9380.93580.96741.01461.0017
AQI 1.13611.04061.03191.14570.97221.02031.05380.94440.97191.0541
SGI 1.16991.08310.99950.99450.93710.97031.0021.00310.9530.918
DEPI 0.73690.94271.07470.75670.98810.77810.72890.93521.03091.0427
SGAI 0.95170.95030.92790.94250.960.96630.99881.01311.00871.031
LVGI 1.08411.0791.0561.04271.03911.06921.02211.02020.99450.9751
TATA -0.1205-0.1103-0.1306-0.16620.17290.21150.19280.20540.17390.1674
M-score -3.06-2.98-3.12-3.38-1.72-1.68-1.80-1.66-1.74-1.82
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