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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.
During the past 13 years, the highest Beneish M-Score of Cowen Group, Inc. was 0.25. The lowest was -3.96. And the median was -2.16.
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 Cowen Group, 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 * 0.8242||+||0.528 * 1||+||0.404 * 3.3328||+||0.892 * 1.2402||+||0.115 * 0.9122|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0617||+||4.679 * 0.0949||-||0.327 * 3.1539|
|This Year (Jun15) TTM:||Last Year (Jun14) TTM:|
|Accounts Receivable was $248.8 Mil.|
Revenue was 119.608 + 121.094 + 121.096 + 107.101 = $468.9 Mil.
Gross Profit was 119.608 + 121.094 + 121.096 + 107.101 = $468.9 Mil.
Total Current Assets was $1,380.6 Mil.
Total Assets was $1,875.0 Mil.
Property, Plant and Equipment(Net PPE) was $24.5 Mil.
Depreciation, Depletion and Amortization(DDA) was $9.7 Mil.
Selling, General & Admin. Expense(SGA) was $439.0 Mil.
Total Current Liabilities was $569.3 Mil.
Long-Term Debt was $189.0 Mil.
Net Income was 6.716 + 16.698 + 142.471 + 6.523 = $172.4 Mil.
Non Operating Income was 11.366 + 44.077 + 61.879 + 16.269 = $133.6 Mil.
Cash Flow from Operations was -119.504 + -40.683 + 6.96 + 14.063 = $-139.2 Mil.
|Accounts Receivable was $243.4 Mil.
Revenue was 92.902 + 106.677 + 96.345 + 82.149 = $378.1 Mil.
Gross Profit was 92.902 + 106.677 + 96.345 + 82.149 = $378.1 Mil.
Total Current Assets was $3,275.5 Mil.
Total Assets was $3,572.2 Mil.
Property, Plant and Equipment(Net PPE) was $28.1 Mil.
Depreciation, Depletion and Amortization(DDA) was $9.8 Mil.
Selling, General & Admin. Expense(SGA) was $333.4 Mil.
Total Current Liabilities was $458.1 Mil.
Long-Term Debt was $0.0 Mil.
1. DSRI = Days Sales in Receivables Index
A large increase in DSR could be indicative of revenue inflation.
|DSRI||=||(Receivables_t / Revenue_t)||/||(Receivables_t-1 / Revenue_t-1)|
|=||(248.775 / 468.899)||/||(243.364 / 378.073)|
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.
|=||(GrossProfit_t-1 / Revenue_t-1)||/||(GrossProfit_t / Revenue_t)|
|=||(121.094 / 378.073)||/||(119.608 / 468.899)|
3. AQI = Asset Quality Index
AQI is the ratio of asset quality in year t to year t-1.
|AQI||=||(1 - (CurrentAssets_t + PPE_t) / TotalAssets_t)||/||(1 - (CurrentAssets_t-1 + PPE_t-1) / TotalAssets_t-1)|
|=||(1 - (1380.637 + 24.471) / 1874.973)||/||(1 - (3275.477 + 28.097) / 3572.174)|
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.
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))|
|=||(9.827 / (9.827 + 28.097))||/||(9.709 / (9.709 + 24.471))|
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)|
|=||(439.041 / 468.899)||/||(333.438 / 378.073)|
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)|
|=||((189.003 + 569.3) / 1874.973)||/||((0 + 458.073) / 3572.174)|
8. TATA = Total Accruals to Total Assets
Total accruals calculated as the change in working capital accounts other than cash less depreciation.
|=||(NetIncome_t - NonOperatingIncome_t||-||CashFlowsfromOperations_t)||/||TotalAssets_t|
|=||(172.408 - 133.591||-||-139.164)||/||1874.973|
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.
Cowen Group, Inc. has a M-score of -1.77 signals that the company is likely to be a manipulator.
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
Cowen Group, Inc. Annual Data
Cowen Group, Inc. Quarterly Data