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Cowen Group, Inc. (NAS:COWN)
Beneish M-Score
-0.96 (As of Today)

Warning Sign:

Beneish M-Score -0.96 higher than -2.22, which implies that it might have manipulated its financial results.

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.

Cowen Group, Inc. has a M-score of -0.96 signals that the company is a manipulator.

COWN' s 10-Year Beneish M-Score Range
Min: -5.58   Max: 0.09
Current: -0.96

-5.58
0.09

During the past 13 years, the highest Beneish M-Score of Cowen Group, Inc. was 0.09. The lowest was -5.58. And the median was -2.28.


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 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 * 2.2008+0.528 * 1+0.404 * 0.4942+0.892 * 1.3665+0.115 * 1.029
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.8661+4.679 * 0.0019-0.327 * 0.2104
=-0.96

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

This Year (Sep14) TTM:Last Year (Sep13) TTM:
Accounts Receivable was $204.4 Mil.
Revenue was 107.101 + 92.902 + 106.677 + 97.438 = $404.1 Mil.
Gross Profit was 107.101 + 92.902 + 106.677 + 97.438 = $404.1 Mil.
Total Current Assets was $3,392.5 Mil.
Total Assets was $3,691.5 Mil.
Property, Plant and Equipment(Net PPE) was $27.4 Mil.
Depreciation, Depletion and Amortization(DDA) was $9.5 Mil.
Selling, General & Admin. Expense(SGA) was $350.0 Mil.
Total Current Liabilities was $527.4 Mil.
Long-Term Debt was $0.0 Mil.
Net Income was 6.523 + 8.382 + 9.84 + 2.519 = $27.3 Mil.
Non Operating Income was 16.269 + 28.646 + 13.457 + 7.39 = $65.8 Mil.
Cash Flow from Operations was 14.063 + -19.149 + -68.585 + 28.336 = $-45.3 Mil.
Accounts Receivable was $68.0 Mil.
Revenue was 81.36 + 81.207 + 67.241 + 65.933 = $295.7 Mil.
Gross Profit was 81.36 + 81.207 + 67.241 + 65.933 = $295.7 Mil.
Total Current Assets was $1,566.7 Mil.
Total Assets was $1,874.3 Mil.
Property, Plant and Equipment(Net PPE) was $28.6 Mil.
Depreciation, Depletion and Amortization(DDA) was $10.3 Mil.
Selling, General & Admin. Expense(SGA) was $295.7 Mil.
Total Current Liabilities was $1,272.8 Mil.
Long-Term Debt was $0.0 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)
=(204.397 / 404.118) / (67.966 / 295.741)
=0.50578544 / 0.22981595
=2.2008

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)
=(92.902 / 295.741) / (107.101 / 404.118)
=1 / 1
=1

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 - (3392.535 + 27.39) / 3691.464) / (1 - (1566.735 + 28.58) / 1874.268)
=0.07355862 / 0.14883304
=0.4942

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
=404.118 / 295.741
=1.3665

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))
=(10.278 / (10.278 + 28.58)) / (9.477 / (9.477 + 27.39))
=0.26450152 / 0.25705916
=1.029

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)
=(349.976 / 404.118) / (295.703 / 295.741)
=0.86602428 / 0.99987151
=0.8661

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 + 527.39) / 3691.464) / ((0 + 1272.783) / 1874.268)
=0.14286744 / 0.67908271
=0.2104

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
=(27.264 - 65.762 - -45.335) / 3691.464
=0.0019

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 -0.96 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 own currency.

Cowen Group, Inc. Annual Data

Dec04Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13
DSRI 6.83581.09270.69631.23180.8038
GMI 11111
AQI 3.02090.08170.65024.76230.8655
SGI 0.57011.88711.00631.02211.3608
DEPI 1.43720.5430.65791.85480.825
SGAI 1.24751.06691.12170.90090.7872
LVGI 5.59612.35410.4472.75581.0499
TATA -0.1922-0.0376-0.24920.0104-0.1074
M-score 0.93-2.66-3.94-1.14-2.90

Cowen Group, Inc. Quarterly Data

Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14
DSRI 0.31981.00861.23180.97391.55270.36190.80381.20091.89462.2008
GMI 1111111111
AQI 4.33721.14484.76235.32381.02690.6750.86550.55370.39150.4942
SGI 0.93650.87711.02211.09511.18611.31981.36081.46531.39121.3665
DEPI 0.42220.46221.85481.80571.74711.66060.8250.90380.97121.029
SGAI 1.10261.13820.87730.82790.79750.74760.78550.78310.85440.8661
LVGI 1.05190.86892.75581.03741.01781.30771.04991.24090.20630.2104
TATA -0.17240.03820.0104-0.1501-0.0343-0.1029-0.1074-0.0115-0.00040.0019
M-score -2.72-2.39-1.13-1.26-1.84-3.38-2.90-2.17-1.27-0.96
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