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Cognizant Technology Solutions Corp (NAS:CTSH)
Beneish M-Score
-2.50 (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 -2.50 suggests that the company is not a manipulator.

CTSH' s Beneish M-Score Range Over the Past 10 Years
Min: -2.83   Max: -0.54
Current: -2.5

-2.83
-0.54

During the past 13 years, the highest Beneish M-Score of Cognizant Technology Solutions Corp was -0.54. The lowest was -2.83. And the median was -2.25.


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 * 0.9782+0.528 * 1.0075+0.404 * 0.9804+0.892 * 1.1477+0.115 * 0.82
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9833+4.679 * -0.029-0.327 * 0.9263
=-2.50

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

This Year (Jun16) TTM:Last Year (Jun15) TTM:
Accounts Receivable was $2,427 Mil.
Revenue was 3369.9 + 3202 + 3232.5 + 3187 = $12,991 Mil.
Gross Profit was 1332.2 + 1286.6 + 1298.9 + 1252.4 = $5,170 Mil.
Total Current Assets was $7,759 Mil.
Total Assets was $13,140 Mil.
Property, Plant and Equipment(Net PPE) was $1,287 Mil.
Depreciation, Depletion and Amortization(DDA) was $351 Mil.
Selling, General & Admin. Expense(SGA) was $2,586 Mil.
Total Current Liabilities was $2,120 Mil.
Long-Term Debt was $840 Mil.
Net Income was 252.4 + 441.2 + 423.4 + 397.2 = $1,514 Mil.
Non Operating Income was -19.3 + 9.6 + -15.3 + -16.2 = $-41 Mil.
Cash Flow from Operations was 359.6 + 68.8 + 690 + 817.9 = $1,936 Mil.
Accounts Receivable was $2,162 Mil.
Revenue was 3085.1 + 2911.4 + 2742.2 + 2581 = $11,320 Mil.
Gross Profit was 1240.3 + 1184.2 + 1102.8 + 1011.2 = $4,539 Mil.
Total Current Assets was $6,771 Mil.
Total Assets was $11,798 Mil.
Property, Plant and Equipment(Net PPE) was $1,277 Mil.
Depreciation, Depletion and Amortization(DDA) was $272 Mil.
Selling, General & Admin. Expense(SGA) was $2,291 Mil.
Total Current Liabilities was $1,957 Mil.
Long-Term Debt was $913 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)
=(2427.4 / 12991.4) / (2162.2 / 11319.7)
=0.18684668 / 0.19101213
=0.9782

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)
=(4538.5 / 11319.7) / (5170.1 / 12991.4)
=0.40093819 / 0.39796327
=1.0075

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 - (7758.9 + 1287.4) / 13140.1) / (1 - (6771.4 + 1277.3) / 11797.6)
=0.31155014 / 0.31776802
=0.9804

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
=12991.4 / 11319.7
=1.1477

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))
=(272.2 / (272.2 + 1277.3)) / (351 / (351 + 1287.4))
=0.17566957 / 0.2142334
=0.82

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)
=(2585.9 / 12991.4) / (2291.4 / 11319.7)
=0.19904706 / 0.20242586
=0.9833

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)
=((840 + 2120) / 13140.1) / ((912.5 + 1956.5) / 11797.6)
=0.22526465 / 0.24318505
=0.9263

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
=(1514.2 - -41.2 - 1936.3) / 13140.1
=-0.029

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 -2.50 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

Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15
DSRI 1.05060.97521.00711.0511.0210.87210.9511.01791.02890.9458
GMI 1.02561.02650.98581.01291.03311.00011.01021.03231.00741.0021
AQI 0.72162.64641.45490.86580.65571.11820.93530.98682.98210.8957
SGI 1.60781.49941.31881.16421.40071.33291.20021.20371.16051.2098
DEPI 0.94611.02140.9320.90140.96711.151.0140.9730.99760.6939
SGAI 1.03180.96011.00060.95030.96211.02540.97680.92141.0161.0179
LVGI 1.06430.98490.88071.18671.04841.08150.96161.03291.40960.8948
TATA -0.01610.00140.0104-0.0419-0.00480.0027-0.0158-0.0192-0.0011-0.0371
M-score -2.10-1.36-1.93-2.59-2.26-2.25-2.42-2.36-1.65-2.56

Cognizant Technology Solutions Corp Quarterly Data

Mar14Jun14Sep14Dec14Mar15Jun15Sep15Dec15Mar16Jun16
DSRI 0.94310.97570.81711.02891.03971.00610.97770.94580.95260.9782
GMI 1.01911.01521.01341.00741.00971.00671.00121.00211.00441.0075
AQI 0.84150.8070.8252.98213.0053.20813.25940.89570.93870.9804
SGI 1.20751.19681.17071.16051.1631.17911.20761.20981.18181.1477
DEPI 0.97170.970.97980.99760.91220.83980.77480.69390.74210.82
SGAI 0.93350.96020.97931.0161.0331.04361.03791.0180.99550.9833
LVGI 0.99350.93230.89741.40961.35951.34761.3080.89480.92550.9263
TATA -0.0214-0.0193-0.0254-0.0011-0.00070.0002-0.0151-0.0371-0.025-0.029
M-score -2.49-2.46-2.64-1.65-1.62-1.56-1.61-2.56-2.51-2.50
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