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Cognizant Technology Solutions Corp (NAS:CTSH)
Beneish M-Score
-2.45 (As of Today)

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.

Cognizant Technology Solutions Corp has a M-score of -2.45 suggests that the company is not a manipulator.

CTSH' s 10-Year Beneish M-Score Range
Min: -3.16   Max: -0.54
Current: -2.45

-3.16
-0.54

During the past 13 years, the highest Beneish M-Score of Cognizant Technology Solutions Corp was -0.54. The lowest was -3.16. And the median was -2.26.


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 Cognizant Technology Solutions Corp 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 * 0.9925+0.528 * 1.0152+0.404 * 0.807+0.892 * 1.1968+0.115 * 0.97
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9603+4.679 * -0.0193-0.327 * 0.9323
=-2.45

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

This Year (Jun14) TTM:Last Year (Jun13) TTM:
Accounts Receivable was $2,121 Mil.
Revenue was 2517.094 + 2422.348 + 2355.488 + 2305.723 = $9,601 Mil.
Gross Profit was 1017.632 + 989.904 + 944.333 + 923.387 = $3,875 Mil.
Total Current Assets was $6,741 Mil.
Total Assets was $8,687 Mil.
Property, Plant and Equipment(Net PPE) was $1,086 Mil.
Depreciation, Depletion and Amortization(DDA) was $188 Mil.
Selling, General & Admin. Expense(SGA) was $1,862 Mil.
Total Current Liabilities was $1,568 Mil.
Long-Term Debt was $0 Mil.
Net Income was 371.908 + 348.878 + 324.332 + 319.627 = $1,365 Mil.
Non Operating Income was -0.215 + -0.353 + -8.575 + -8.857 = $-18 Mil.
Cash Flow from Operations was 408.313 + 157.32 + 505.873 + 478.878 = $1,550 Mil.
Accounts Receivable was $1,785 Mil.
Revenue was 2161.24 + 2020.738 + 1948.215 + 1891.688 = $8,022 Mil.
Gross Profit was 889.227 + 820.773 + 797.281 + 779.79 = $3,287 Mil.
Total Current Assets was $5,134 Mil.
Total Assets was $7,012 Mil.
Property, Plant and Equipment(Net PPE) was $1,018 Mil.
Depreciation, Depletion and Amortization(DDA) was $170 Mil.
Selling, General & Admin. Expense(SGA) was $1,620 Mil.
Total Current Liabilities was $1,357 Mil.
Long-Term Debt was $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)
=(2120.58 / 9600.653) / (1785.227 / 8021.881)
=0.22087873 / 0.22254469
=0.9925

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)
=(989.904 / 8021.881) / (1017.632 / 9600.653)
=0.40976312 / 0.40364504
=1.0152

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 - (6740.69 + 1086.116) / 8687.294) / (1 - (5133.961 + 1017.705) / 7012.32)
=0.09905133 / 0.12273456
=0.807

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
=9600.653 / 8021.881
=1.1968

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))
=(169.965 / (169.965 + 1017.705)) / (187.969 / (187.969 + 1086.116))
=0.14310793 / 0.14753254
=0.97

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)
=(1862.259 / 9600.653) / (1620.427 / 8021.881)
=0.19397212 / 0.20200088
=0.9603

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 + 1567.662) / 8687.294) / ((0 + 1357.297) / 7012.32)
=0.18045458 / 0.19355891
=0.9323

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
=(1364.745 - -18 - 1550.384) / 8687.294
=-0.0193

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.

Cognizant Technology Solutions Corp has a M-score of -2.45 suggests that the company will not 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.

Cognizant Technology Solutions Corp Annual Data

Dec04Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13
DSRI 1.12251.05891.05060.97521.00711.0511.0210.97540.96591.0191
GMI 1.0060.99271.02561.02650.98581.01291.03311.00011.01021.0323
AQI 0.74641.39670.72162.64641.45490.86580.65571.11820.93531.058
SGI 1.59321.50991.60781.49941.31881.16421.40071.33291.20021.2037
DEPI 1.1051.20770.94611.02140.9320.90140.96711.151.0140.9729
SGAI 0.98921.03191.03180.96011.00060.95030.96211.02540.97680.9214
LVGI 1.15650.89121.05090.98490.88071.18671.04841.08150.96161.0235
TATA -0.04740.009-0.01610.00140.0104-0.0419-0.00480.0027-0.0158-0.019
M-score -2.20-1.72-2.09-1.36-1.93-2.59-2.26-2.16-2.41-2.33

Cognizant Technology Solutions Corp Quarterly Data

Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14
DSRI 0.980.97411.01590.96591.01091.0021.00381.01910.95880.9925
GMI 1.00781.0041.00881.01021.01931.03091.03211.03231.01911.0152
AQI 1.12251.06110.91520.93531.0641.04481.01091.0580.84150.807
SGI 1.29121.25771.22431.20021.18491.18471.19461.20371.20751.1968
DEPI 1.08931.10721.04661.0141.03021.00060.99630.97290.97160.97
SGAI 1.01481.00730.98080.97680.95810.92630.93180.92140.93350.9603
LVGI 1.04231.1281.02440.96161.01410.95081.00691.02350.99350.9323
TATA 0.0013-0.0094-0.0116-0.0158-0.0058-0.0027-0.0085-0.019-0.0214-0.0193
M-score -2.19-2.32-2.35-2.41-2.29-2.26-2.31-2.33-2.48-2.45
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