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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 0.24. The lowest was -4.15. And the median was -2.08.
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 * 0.8391||+||0.528 * 1||+||0.404 * 1.1232||+||0.892 * 1.0151||+||0.115 * 1.1212|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.2058||+||4.679 * 0.1556||-||0.327 * 0.9467|
|This Year (Dec16) TTM:||Last Year (Dec15) TTM:|
|Accounts Receivable was $197.1 Mil.|
Revenue was 122.268 + 131.027 + 117.231 + 101.039 = $471.6 Mil.
Gross Profit was 122.268 + 131.027 + 117.231 + 101.039 = $471.6 Mil.
Total Current Assets was $1,041.1 Mil.
Total Assets was $2,018.5 Mil.
Property, Plant and Equipment(Net PPE) was $42.4 Mil.
Depreciation, Depletion and Amortization(DDA) was $12.7 Mil.
Selling, General & Admin. Expense(SGA) was $455.0 Mil.
Total Current Liabilities was $866.7 Mil.
Long-Term Debt was $0.0 Mil.
Net Income was -1.904 + -3.219 + -10.456 + -3.698 = $-19.3 Mil.
Non Operating Income was 23.547 + 46.44 + -44.301 + -4.246 = $21.4 Mil.
Cash Flow from Operations was -15.362 + 19.197 + -17.989 + -340.62 = $-354.8 Mil.
|Accounts Receivable was $231.4 Mil.
Revenue was 110.611 + 113.254 + 119.608 + 121.094 = $464.6 Mil.
Gross Profit was 110.611 + 113.254 + 119.608 + 121.094 = $464.6 Mil.
Total Current Assets was $1,023.2 Mil.
Total Assets was $1,787.7 Mil.
Property, Plant and Equipment(Net PPE) was $27.2 Mil.
Depreciation, Depletion and Amortization(DDA) was $9.5 Mil.
Selling, General & Admin. Expense(SGA) was $371.7 Mil.
Total Current Liabilities was $810.8 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)|
|=||(197.143 / 471.565)||/||(231.447 / 464.567)|
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)|
|=||(464.567 / 464.567)||/||(471.565 / 471.565)|
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 - (1041.136 + 42.408) / 2018.523)||/||(1 - (1023.185 + 27.231) / 1787.659)|
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))|
|=||(9.498 / (9.498 + 27.231))||/||(12.713 / (12.713 + 42.408))|
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)|
|=||(454.969 / 471.565)||/||(371.73 / 464.567)|
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)|
|=||((0 + 866.668) / 2018.523)||/||((0 + 810.755) / 1787.659)|
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|
|=||(-19.277 - 21.44||-||-354.774)||/||2018.523|
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 -1.84 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