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Cognizant Technology Solutions Corp (NAS:CTSH)
Beneish M-Score
-1.61 (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 -1.61 signals that the company is a manipulator.

CTSH' s Beneish M-Score Range Over the Past 10 Years
Min: -2.83   Max: -0.54
Current: -1.61

-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 -2.21.


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 * 0.9777+0.528 * 1.0012+0.404 * 3.2594+0.892 * 1.2076+0.115 * 0.7749
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0379+4.679 * -0.0152-0.327 * 1.308
=-1.61

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

This Year (Sep15) TTM:Last Year (Sep14) TTM:
Accounts Receivable was $2,136 Mil.
Revenue was 3187 + 3085.1 + 2911.4 + 2742.23 = $11,926 Mil.
Gross Profit was 1252.4 + 1240.3 + 1184.2 + 1102.846 = $4,780 Mil.
Total Current Assets was $7,238 Mil.
Total Assets was $12,268 Mil.
Property, Plant and Equipment(Net PPE) was $1,279 Mil.
Depreciation, Depletion and Amortization(DDA) was $305 Mil.
Selling, General & Admin. Expense(SGA) was $2,413 Mil.
Total Current Liabilities was $2,128 Mil.
Long-Term Debt was $900 Mil.
Net Income was 397.2 + 420.1 + 382.9 + 362.857 = $1,563 Mil.
Non Operating Income was -16.2 + -10.2 + -2.7 + -9.28 = $-38 Mil.
Cash Flow from Operations was 817.9 + 456.1 + 189.3 + 324.196 = $1,787 Mil.
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.



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)
=(2135.7 / 11925.73) / (1809.038 / 9875.939)
=0.17908338 / 0.1831763
=0.9777

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)
=(1240.3 / 9875.939) / (1252.4 / 11925.73)
=0.40128336 / 0.40079274
=1.0012

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 - (7237.9 + 1278.9) / 12267.6) / (1 - (7260.026 + 1101.468) / 9227.043)
=0.30574848 / 0.09380568
=3.2594

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
=11925.73 / 9875.939
=1.2076

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))
=(193.108 / (193.108 + 1101.468)) / (304.876 / (304.876 + 1278.9))
=0.14916699 / 0.19249944
=0.7749

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)
=(2412.522 / 11925.73) / (1924.902 / 9875.939)
=0.20229554 / 0.19490825
=1.0379

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)
=((900 + 2128.4) / 12267.6) / ((0 + 1741.464) / 9227.043)
=0.24686165 / 0.18873479
=1.308

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
=(1563.057 - -38.38 - 1787.496) / 12267.6
=-0.0152

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 -1.61 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

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 0.72162.64641.45490.86580.65571.11820.93531.0582.66030.9365
SGI 1.60781.49941.31881.16421.40071.33291.20021.20371.16051.2098
DEPI 0.94611.02140.9320.90140.96711.151.0140.97290.99790.6938
SGAI 1.03180.96011.00060.95030.96211.02540.97680.92141.0161.0179
LVGI 1.06430.98490.88071.18671.04841.08150.96161.02351.39330.9135
TATA -0.01610.00140.0104-0.0419-0.00480.0027-0.0158-0.019-0.0011-0.0371
M-score -2.10-1.36-1.93-2.59-2.26-2.25-2.42-2.33-1.77-2.55

Cognizant Technology Solutions Corp Quarterly Data

Sep13Dec13Mar14Jun14Sep14Dec14Mar15Jun15Sep15Dec15
DSRI 1.16111.01790.94310.97570.81711.02891.03971.00610.97770.9458
GMI 1.03211.03231.01911.01521.01341.00741.00971.00671.00121.0021
AQI 1.01091.0580.84150.8070.8252.66033.0053.20813.25940.9365
SGI 1.19461.20371.20751.19681.17071.16051.1631.17911.20761.2098
DEPI 0.99630.97290.97160.970.97970.99790.91230.83980.77490.6938
SGAI 0.93180.92140.93350.96030.97941.0161.03311.04361.03791.0179
LVGI 1.00691.02350.99350.93230.89741.39331.35951.34761.3080.9135
TATA -0.0085-0.019-0.0214-0.0193-0.0253-0.0011-0.00070.0002-0.0152-0.0371
M-score -2.17-2.33-2.49-2.46-2.64-1.77-1.62-1.56-1.61-2.55
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