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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.
During the past 13 years, the highest Beneish M-Score of Cowen Group, Inc. was 0.25. The lowest was -4.70. And the median was -2.17.
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 * 2.2197||+||0.528 * 1||+||0.404 * 0.4942||+||0.892 * 1.3548||+||0.115 * 1.029|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9107||+||4.679 * 0.0012||-||0.327 * 0.2104|
|This Year (Sep14) TTM:||Last Year (Sep13) TTM:|
|Accounts Receivable was $204.4 Mil.|
Revenue was 107.101 + 92.902 + 106.677 + 95.072 = $401.8 Mil.
Gross Profit was 107.101 + 92.902 + 106.677 + 95.072 = $401.8 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 $361.5 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 + 9.756 = $68.1 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 82.149 + 81.207 + 67.241 + 65.933 = $296.5 Mil.
Gross Profit was 82.149 + 81.207 + 67.241 + 65.933 = $296.5 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 $293.0 Mil.
Total Current Liabilities was $1,272.8 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)|
|=||(204.397 / 401.752)||/||(67.966 / 296.53)|
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)|
|=||(92.902 / 296.53)||/||(107.101 / 401.752)|
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 - (3392.535 + 27.39) / 3691.464)||/||(1 - (1566.735 + 28.58) / 1874.268)|
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))|
|=||(10.278 / (10.278 + 28.58))||/||(9.477 / (9.477 + 27.39))|
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)|
|=||(361.469 / 401.752)||/||(292.968 / 296.53)|
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)|
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|
|=||(27.264 - 68.128||-||-45.335)||/||3691.464|
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.
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