Switch to:
Cognizant Technology Solutions Corp (NAS:CTSH)
Beneish M-Score
-2.48 (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 -2.48 suggests that the company is not a manipulator.

CTSH' s 10-Year Beneish M-Score Range
Min: -3.35   Max: -0.54
Current: -2.48

-3.35
-0.54

During the past 13 years, the highest Beneish M-Score of Cognizant Technology Solutions Corp was -0.54. The lowest was -3.35. 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 * 0.9588+0.528 * 1.0191+0.404 * 0.8415+0.892 * 1.2075+0.115 * 0.9716
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9335+4.679 * -0.0214-0.327 * 0.9935
=-2.48

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

This Year (Mar14) TTM:Last Year (Mar13) TTM:
Accounts Receivable was $1,971 Mil.
Revenue was 2422.348 + 2355.488 + 2305.723 + 2161.24 = $9,245 Mil.
Gross Profit was 989.904 + 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.
Net Income was 348.878 + 324.332 + 319.627 + 300.41 = $1,293 Mil.
Non Operating Income was -0.353 + -8.575 + -8.857 + -19.486 = $-37 Mil.
Cash Flow from Operations was 157.32 + 505.873 + 478.878 + 365.557 = $1,508 Mil.
Accounts Receivable was $1,702 Mil.
Revenue was 2020.738 + 1948.215 + 1891.688 + 1795.22 = $7,656 Mil.
Gross Profit was 820.773 + 797.281 + 779.79 + 764.331 = $3,162 Mil.
Total Current Assets was $4,837 Mil.
Total Assets was $6,709 Mil.
Property, Plant and Equipment(Net PPE) was $1,008 Mil.
Depreciation, Depletion and Amortization(DDA) was $164 Mil.
Selling, General & Admin. Expense(SGA) was $1,597 Mil.
Total Current Liabilities was $1,226 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)
=(1970.954 / 9244.799) / (1702.334 / 7655.861)
=0.21319598 / 0.22235696
=0.9588

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)
=(944.333 / 7655.861) / (989.904 / 9244.799)
=0.41303976 / 0.40529286
=1.0191

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 - (6290.74 + 1090.885) / 8279.299) / (1 - (4836.64 + 1008.198) / 6709.302)
=0.10842391 / 0.12884559
=0.8415

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
=9244.799 / 7655.861
=1.2075

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))
=(163.564 / (163.564 + 1008.198)) / (183.009 / (183.009 + 1090.885))
=0.13958807 / 0.14366109
=0.9716

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)
=(1799.8 / 9244.799) / (1596.672 / 7655.861)
=0.19468244 / 0.20855551
=0.9335

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 + 1502.866) / 8279.299) / ((0 + 1225.843) / 6709.302)
=0.18152092 / 0.18270798
=0.9935

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
=(1293.247 - -37.271 - 1507.628) / 8279.299
=-0.0214

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 -2.48 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 0.75621.39670.72162.64641.45490.86580.65571.11820.93531.058
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 -2.20-1.71-2.10-1.36-1.93-2.59-2.26-2.16-2.41-2.33

Cognizant Technology Solutions Corp Quarterly Data

Dec11Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14
DSRI 0.97540.980.97411.01590.96591.01091.0021.00381.01910.9588
GMI 1.00011.00781.0041.00881.01021.01931.03091.03211.03231.0191
AQI 1.11821.12251.06110.91520.93531.0641.04481.01091.0580.8415
SGI 1.33291.29121.25771.22431.20021.18491.18471.19461.20371.2075
DEPI 1.151.08931.10721.04661.0141.03021.00060.99630.97290.9716
SGAI 1.02541.01481.00730.98080.97680.95810.92630.93180.92140.9335
LVGI 1.08151.04231.1281.02440.96161.01410.95081.00691.02350.9935
TATA 0.00270.0013-0.0094-0.0116-0.0158-0.0058-0.0027-0.0085-0.019-0.0214
M-score -2.16-2.19-2.32-2.35-2.41-2.29-2.26-2.31-2.33-2.48
Get WordPress Plugins for easy affiliate links on Stock Tickers and Guru Names | Earn affiliate commissions by embedding GuruFocus Charts
GuruFocus Affiliate Program: Earn up to $400 per referral. ( Learn More)
Free 7-day Trial
FEEDBACK
Email Hide