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Cognizant Technology Solutions Corp (NAS:CTSH)
Beneish M-Score
-1.62 (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 -1.62 signals that the company is a manipulator.

CTSH' s 10-Year Beneish M-Score Range
Min: -3.4   Max: -0.54
Current: -1.62

-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 -2.26.


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 * 1.0397+0.528 * 1.0097+0.404 * 3.005+0.892 * 1.163+0.115 * 0.9125
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0331+4.679 * -0.0008-0.327 * 1.3595
=-1.62

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

This Year (Mar15) TTM:Last Year (Mar14) TTM:
Accounts Receivable was $2,060 Mil.
Revenue was 2911.4 + 2742.23 + 2581.009 + 2517.094 = $10,752 Mil.
Gross Profit was 1184.2 + 1102.846 + 1011.181 + 1017.632 = $4,316 Mil.
Total Current Assets was $6,407 Mil.
Total Assets was $11,383 Mil.
Property, Plant and Equipment(Net PPE) was $1,268 Mil.
Depreciation, Depletion and Amortization(DDA) was $237 Mil.
Selling, General & Admin. Expense(SGA) was $2,162 Mil.
Total Current Liabilities was $1,884 Mil.
Long-Term Debt was $925 Mil.
Net Income was 382.9 + 362.857 + 355.624 + 371.908 = $1,473 Mil.
Non Operating Income was -2.7 + -9.28 + -10.975 + -0.215 = $-23 Mil.
Cash Flow from Operations was 189.3 + 324.196 + 583.181 + 408.333 = $1,505 Mil.
Accounts Receivable was $1,704 Mil.
Revenue was 2422.3 + 2355.488 + 2305.723 + 2161.24 = $9,245 Mil.
Gross Profit was 989.9 + 944.333 + 923.387 + 889.227 = $3,747 Mil.
Total Current Assets was $6,291 Mil.
Total Assets was $8,279 Mil.
Property, Plant and Equipment(Net PPE) was $1,091 Mil.
Depreciation, Depletion and Amortization(DDA) was $183 Mil.
Selling, General & Admin. Expense(SGA) was $1,800 Mil.
Total Current Liabilities was $1,503 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)
=(2059.9 / 10751.733) / (1703.605 / 9244.751)
=0.19158772 / 0.18427808
=1.0397

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)
=(1102.846 / 9244.751) / (1184.2 / 10751.733)
=0.40529453 / 0.40141054
=1.0097

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 - (6406.5 + 1268) / 11383.4) / (1 - (6290.74 + 1090.885) / 8279.299)
=0.32581654 / 0.10842391
=3.005

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
=10751.733 / 9244.751
=1.163

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))
=(183.029 / (183.029 + 1090.885)) / (236.967 / (236.967 + 1268))
=0.14367453 / 0.15745661
=0.9125

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)
=(2162.426 / 10751.733) / (1799.805 / 9244.751)
=0.20112348 / 0.19468399
=1.0331

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)
=((925 + 1884.1) / 11383.4) / ((0 + 1502.866) / 8279.299)
=0.24677161 / 0.18152092
=1.3595

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
=(1473.289 - -23.17 - 1505.01) / 11383.4
=-0.0008

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 -1.62 signals that the company is likely to 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

Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14
DSRI 1.21441.05060.97521.00711.0511.0210.87210.9511.01791.0289
GMI 0.99271.02561.02650.98581.01291.03311.00011.01021.03231.0074
AQI 1.39670.72162.64641.45490.86580.65571.11820.93530.98682.8523
SGI 1.50991.60781.49941.31881.16421.40071.33291.20021.20371.1605
DEPI 1.20770.94611.02140.9320.90140.96711.151.0140.97290.9979
SGAI 1.03191.03180.96011.00060.95030.96211.02540.97680.92141.016
LVGI 0.88011.06430.98490.88071.18671.04841.08150.96161.03291.3807
TATA 0.009-0.01610.00140.0104-0.0419-0.00480.0027-0.0158-0.0192-0.0011
M-score -1.57-2.10-1.36-1.93-2.59-2.26-2.25-2.42-2.36-1.69

Cognizant Technology Solutions Corp Quarterly Data

Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14Dec14Mar15
DSRI 0.9510.88830.87611.16111.01790.94310.97570.81711.02891.0397
GMI 1.01021.01931.03091.03211.03231.01911.01521.01341.00741.0097
AQI 0.93531.0641.04481.01090.98680.84150.8070.8252.85233.005
SGI 1.20021.18491.18471.19461.20371.20751.19681.17071.16051.163
DEPI 1.0141.03021.00060.99630.97290.97160.970.97970.99790.9125
SGAI 0.97680.95810.92630.93180.92140.93350.96030.97941.0161.0331
LVGI 0.96161.01410.95081.00691.03290.99350.93230.89741.38071.3595
TATA -0.0158-0.0058-0.0027-0.0085-0.0192-0.0214-0.0193-0.0253-0.0011-0.0008
M-score -2.42-2.40-2.38-2.17-2.36-2.49-2.46-2.64-1.69-1.62
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