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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.
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.
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|
|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
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)|
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.
|=||(GrossProfit_t-1 / Revenue_t-1)||/||(GrossProfit_t / Revenue_t)|
|=||(944.333 / 7655.861)||/||(989.904 / 9244.799)|
3. AQI = Asset Quality Index
AQI is the ratio of asset quality in year t to year t-1.
|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)|
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.
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))|
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)|
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)|
8. TATA = Total Accruals to Total Assets
Total accruals calculated as the change in working capital accounts other than cash less depreciation.
|=||(NetIncome_t - NonOperatingIncome_t||-||CashFlowsfromOperations_t)||/||TotalAssets_t|
|=||(1293.247 - -37.271||-||1507.628)||/||8279.299|
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.
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
Cognizant Technology Solutions Corp Annual Data
Cognizant Technology Solutions Corp Quarterly Data