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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 0.45. The lowest was -4.15. And the median was -1.67.
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 * 0.8237||+||0.528 * 1||+||0.404 * 1.8693||+||0.892 * 0.9681||+||0.115 * 1.1765|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.1677||+||4.679 * 0.1269||-||0.327 * 0.7148|
* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.
|This Year (Sep16) TTM:||Last Year (Sep15) TTM:|
|Accounts Receivable was $189.1 Mil.|
Revenue was 131.027 + 117.231 + 101.039 + 110.611 = $459.9 Mil.
Gross Profit was 131.027 + 117.231 + 101.039 + 110.611 = $459.9 Mil.
Total Current Assets was $906.3 Mil.
Total Assets was $1,802.2 Mil.
Property, Plant and Equipment(Net PPE) was $43.5 Mil.
Depreciation, Depletion and Amortization(DDA) was $12.6 Mil.
Selling, General & Admin. Expense(SGA) was $456.0 Mil.
Total Current Liabilities was $278.9 Mil.
Long-Term Debt was $206.4 Mil.
Net Income was -3.219 + -10.456 + -3.698 + 30.661 = $13.3 Mil.
Non Operating Income was 46.44 + -44.301 + -4.246 + 14.862 = $12.8 Mil.
Cash Flow from Operations was 19.197 + -17.989 + -340.62 + 111.181 = $-228.2 Mil.
|Accounts Receivable was $237.2 Mil.
Revenue was 113.254 + 119.608 + 121.094 + 121.096 = $475.1 Mil.
Gross Profit was 113.254 + 119.608 + 121.094 + 121.096 = $475.1 Mil.
Total Current Assets was $1,392.8 Mil.
Total Assets was $1,901.0 Mil.
Property, Plant and Equipment(Net PPE) was $27.2 Mil.
Depreciation, Depletion and Amortization(DDA) was $9.7 Mil.
Selling, General & Admin. Expense(SGA) was $403.3 Mil.
Total Current Liabilities was $526.4 Mil.
Long-Term Debt was $189.8 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)|
|=||(189.147 / 459.908)||/||(237.182 / 475.052)|
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)|
|=||(475.052 / 475.052)||/||(459.908 / 459.908)|
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 - (906.325 + 43.463) / 1802.178)||/||(1 - (1392.809 + 27.159) / 1900.966)|
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))|
|=||(9.736 / (9.736 + 27.159))||/||(12.568 / (12.568 + 43.463))|
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)|
|=||(455.972 / 459.908)||/||(403.348 / 475.052)|
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)|
|=||((206.422 + 278.926) / 1802.178)||/||((189.777 + 526.432) / 1900.966)|
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|
|=||(13.288 - 12.755||-||-228.231)||/||1802.178|
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 -1.64 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