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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 -3.79. And the median was -2.29.
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 * 1.0277||+||0.528 * 1||+||0.404 * 1.9175||+||0.892 * 1.086||+||0.115 * 1.0771|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9878||+||4.679 * 0.0417||-||0.327 * 0.9972|
|This Year (Dec15) TTM:||Last Year (Dec14) TTM:|
|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 $1,196.8 Mil.
Total Assets was $1,792.5 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 $438.3 Mil.
Total Current Liabilities was $367.6 Mil.
Long-Term Debt was $190.8 Mil.
Net Income was 30.661 + -10.346 + 6.716 + 16.698 = $43.7 Mil.
Non Operating Income was 14.862 + -27.219 + 8.011 + 40.75 = $36.4 Mil.
Cash Flow from Operations was 111.181 + -18.346 + -119.504 + -40.683 = $-67.4 Mil.
|Accounts Receivable was $207.4 Mil.
Revenue was 121.096 + 107.101 + 92.902 + 106.677 = $427.8 Mil.
Gross Profit was 121.096 + 107.101 + 92.902 + 106.677 = $427.8 Mil.
Total Current Assets was $1,981.5 Mil.
Total Assets was $2,405.7 Mil.
Property, Plant and Equipment(Net PPE) was $26.4 Mil.
Depreciation, Depletion and Amortization(DDA) was $10.2 Mil.
Selling, General & Admin. Expense(SGA) was $408.6 Mil.
Total Current Liabilities was $565.9 Mil.
Long-Term Debt was $185.6 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)|
|=||(231.447 / 464.567)||/||(207.369 / 427.776)|
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)|
|=||(113.254 / 427.776)||/||(110.611 / 464.567)|
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 - (1196.832 + 27.231) / 1792.454)||/||(1 - (1981.455 + 26.388) / 2405.676)|
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))|
|=||(10.188 / (10.188 + 26.388))||/||(9.498 / (9.498 + 27.231))|
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)|
|=||(438.273 / 464.567)||/||(408.561 / 427.776)|
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)|
|=||((190.761 + 367.63) / 1792.454)||/||((185.619 + 565.938) / 2405.676)|
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|
|=||(43.729 - 36.404||-||-67.352)||/||1792.454|
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 -1.80 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