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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.
During the past 13 years, the highest Beneish M-Score of Fortress Investment Group LLC was -2.49. The lowest was -7.37. And the median was -2.92.
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 Fortress Investment Group LLC 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 * 0.8327||+||0.528 * 1||+||0.404 * 1.0248||+||0.892 * 1.0069||+||0.115 * 0.6119|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9312||+||4.679 * -0.1079||-||0.327 * 1.2191|
|This Year (Dec15) TTM:||Last Year (Dec14) TTM:|
|Accounts Receivable was $274 Mil.|
Revenue was 414.66 + 264.019 + 308.488 + 226.689 = $1,214 Mil.
Gross Profit was 414.66 + 264.019 + 308.488 + 226.689 = $1,214 Mil.
Total Current Assets was $614 Mil.
Total Assets was $2,275 Mil.
Property, Plant and Equipment(Net PPE) was $50 Mil.
Depreciation, Depletion and Amortization(DDA) was $40 Mil.
Selling, General & Admin. Expense(SGA) was $908 Mil.
Total Current Liabilities was $684 Mil.
Long-Term Debt was $231 Mil.
Net Income was 54.708 + -14.245 + 3.316 + 34.713 = $78 Mil.
Non Operating Income was -16.38 + -61.555 + -49.569 + 208.508 = $81 Mil.
Cash Flow from Operations was 147.12 + 168.471 + 81.012 + -153.551 = $243 Mil.
|Accounts Receivable was $327 Mil.
Revenue was 454.946 + 243.18 + 270.344 + 237.11 = $1,206 Mil.
Gross Profit was 454.946 + 243.18 + 270.344 + 237.11 = $1,206 Mil.
Total Current Assets was $718 Mil.
Total Assets was $2,502 Mil.
Property, Plant and Equipment(Net PPE) was $55 Mil.
Depreciation, Depletion and Amortization(DDA) was $21 Mil.
Selling, General & Admin. Expense(SGA) was $968 Mil.
Total Current Liabilities was $750 Mil.
Long-Term Debt was $75 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)|
|=||(273.811 / 1213.856)||/||(326.575 / 1205.58)|
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)|
|=||(264.019 / 1205.58)||/||(414.66 / 1213.856)|
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 - (613.653 + 49.963) / 2275.281)||/||(1 - (717.664 + 55.113) / 2502.384)|
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))|
|=||(20.61 / (20.61 + 55.113))||/||(40.024 / (40.024 + 49.963))|
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)|
|=||(908.056 / 1213.856)||/||(968.474 / 1205.58)|
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)|
|=||((230.677 + 683.968) / 2275.281)||/||((75 + 750.133) / 2502.384)|
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|
|=||(78.492 - 81.004||-||243.052)||/||2275.281|
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.
Fortress Investment Group LLC has a M-score of -3.23 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
Fortress Investment Group LLC Annual Data
Fortress Investment Group LLC Quarterly Data