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Beneish M-Score -1.18 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.
During the past 13 years, the highest Beneish M-Score of Cowen Group Inc was 0.45. The lowest was -3.79. And the median was -1.81.
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 * 0.9461||+||0.528 * 1||+||0.404 * 1.3317||+||0.892 * 1.0052||+||0.115 * 1.313|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9312||+||4.679 * 0.2129||-||0.327 * 0.4862|
|This Year (Mar16) TTM:||Last Year (Mar15) TTM:|
|Accounts Receivable was $244.0 Mil.|
Revenue was 101.039 + 110.611 + 113.254 + 119.608 = $444.5 Mil.
Gross Profit was 101.039 + 110.611 + 113.254 + 119.608 = $444.5 Mil.
Total Current Assets was $1,168.6 Mil.
Total Assets was $1,874.9 Mil.
Property, Plant and Equipment(Net PPE) was $37.7 Mil.
Depreciation, Depletion and Amortization(DDA) was $10.4 Mil.
Selling, General & Admin. Expense(SGA) was $417.2 Mil.
Total Current Liabilities was $138.6 Mil.
Long-Term Debt was $214.3 Mil.
Net Income was -3.698 + 30.661 + -10.346 + 6.716 = $23.3 Mil.
Non Operating Income was -4.246 + 14.862 + -27.219 + 8.011 = $-8.6 Mil.
Cash Flow from Operations was -340.62 + 111.181 + -18.346 + -119.504 = $-367.3 Mil.
|Accounts Receivable was $256.5 Mil.
Revenue was 121.094 + 121.096 + 107.101 + 92.902 = $442.2 Mil.
Gross Profit was 121.094 + 121.096 + 107.101 + 92.902 = $442.2 Mil.
Total Current Assets was $1,097.4 Mil.
Total Assets was $1,533.0 Mil.
Property, Plant and Equipment(Net PPE) was $25.0 Mil.
Depreciation, Depletion and Amortization(DDA) was $9.9 Mil.
Selling, General & Admin. Expense(SGA) was $445.6 Mil.
Total Current Liabilities was $405.2 Mil.
Long-Term Debt was $188.3 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)|
|=||(243.959 / 444.512)||/||(256.499 / 442.193)|
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)|
|=||(442.193 / 442.193)||/||(444.512 / 444.512)|
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 - (1168.585 + 37.684) / 1874.936)||/||(1 - (1097.415 + 25.006) / 1532.953)|
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))|
|=||(9.946 / (9.946 + 25.006))||/||(10.427 / (10.427 + 37.684))|
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)|
|=||(417.18 / 444.512)||/||(445.644 / 442.193)|
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)|
|=||((214.332 + 138.569) / 1874.936)||/||((188.252 + 405.157) / 1532.953)|
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|
|=||(23.333 - -8.592||-||-367.289)||/||1874.936|
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 -1.18 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