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Cognizant Technology Solutions Corp (NAS:CTSH)
Beneish M-Score
-2.64 (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 -2.64 suggests that the company is not a manipulator.

CTSH' s 10-Year Beneish M-Score Range
Min: -3.4   Max: -0.54
Current: -2.64

-3.4
-0.54

During the past 13 years, the highest Beneish M-Score of Cognizant Technology Solutions Corp was -0.54. The lowest was -3.40. 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 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 * 0.8171+0.528 * 1.0134+0.404 * 0.825+0.892 * 1.1707+0.115 * 0.9797
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9794+4.679 * -0.0253-0.327 * 0.8974
=-2.64

* 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 $1,809 Mil.
Revenue was 2581.009 + 2517.094 + 2422.348 + 2355.488 = $9,876 Mil.
Gross Profit was 1011.181 + 1017.632 + 989.904 + 944.333 = $3,963 Mil.
Total Current Assets was $7,260 Mil.
Total Assets was $9,227 Mil.
Property, Plant and Equipment(Net PPE) was $1,101 Mil.
Depreciation, Depletion and Amortization(DDA) was $193 Mil.
Selling, General & Admin. Expense(SGA) was $1,925 Mil.
Total Current Liabilities was $1,741 Mil.
Long-Term Debt was $0 Mil.
Net Income was 355.624 + 371.908 + 348.878 + 324.332 = $1,401 Mil.
Non Operating Income was -10.975 + -0.215 + -0.353 + -8.575 = $-20 Mil.
Cash Flow from Operations was 583.181 + 408.313 + 157.32 + 505.873 = $1,655 Mil.
Accounts Receivable was $1,891 Mil.
Revenue was 2305.723 + 2161.24 + 2020.738 + 1948.215 = $8,436 Mil.
Gross Profit was 923.387 + 889.227 + 820.773 + 797.281 = $3,431 Mil.
Total Current Assets was $5,739 Mil.
Total Assets was $7,617 Mil.
Property, Plant and Equipment(Net PPE) was $1,012 Mil.
Depreciation, Depletion and Amortization(DDA) was $173 Mil.
Selling, General & Admin. Expense(SGA) was $1,679 Mil.
Total Current Liabilities was $1,602 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)
=(1809.038 / 9875.939) / (1891.186 / 8435.916)
=0.1831763 / 0.22418265
=0.8171

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)
=(1017.632 / 8435.916) / (1011.181 / 9875.939)
=0.40667404 / 0.40128336
=1.0134

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 - (7260.026 + 1101.468) / 9227.043) / (1 - (5739.205 + 1011.803) / 7617.149)
=0.09380568 / 0.11370934
=0.825

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
=9875.939 / 8435.916
=1.1707

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))
=(173.177 / (173.177 + 1011.803)) / (193.108 / (193.108 + 1101.468))
=0.14614339 / 0.14916699
=0.9797

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)
=(1924.902 / 9875.939) / (1678.852 / 8435.916)
=0.19490825 / 0.19901241
=0.9794

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 + 1741.464) / 9227.043) / ((0 + 1602.038) / 7617.149)
=0.18873479 / 0.2103199
=0.8974

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
=(1400.742 - -20.118 - 1654.687) / 9227.043
=-0.0253

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 -2.64 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 1.15751.21441.05060.97521.00711.0511.0210.87210.9511.0179
GMI 1.0060.99271.02561.02650.98581.01291.03311.00011.01021.0323
AQI 0.75621.39670.72162.64641.45490.86580.65571.11820.93531.058
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 1.17160.88011.06430.98490.88071.18671.04841.08150.96161.0235
TATA -0.04740.009-0.01610.00140.0104-0.0419-0.00480.0027-0.0158-0.019
M-score -2.17-1.57-2.10-1.36-1.93-2.59-2.26-2.25-2.42-2.33

Cognizant Technology Solutions Corp Quarterly Data

Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14
DSRI 0.97411.00810.9510.88830.87611.16111.01790.94310.97570.8171
GMI 1.0041.00881.01021.01931.03091.03211.03231.01911.01521.0134
AQI 1.06110.91520.93531.0641.04481.01091.0580.84150.8070.825
SGI 1.25771.22431.20021.18491.18471.19461.20371.20751.19681.1707
DEPI 1.10721.04661.0141.03021.00060.99630.97290.97160.970.9797
SGAI 1.00730.98080.97680.95810.92630.93180.92140.93350.96030.9794
LVGI 1.1281.02440.96161.01410.95081.00691.02350.99350.93230.8974
TATA -0.0094-0.0116-0.0158-0.0058-0.0027-0.0085-0.019-0.0214-0.0193-0.0253
M-score -2.32-2.36-2.42-2.40-2.38-2.17-2.33-2.49-2.46-2.64
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