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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 0.83. The lowest was -7.37. And the median was -3.19.
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 * 1.0261||+||0.528 * 1||+||0.404 * 0.9508||+||0.892 * 0.9268||+||0.115 * 1|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9398||+||4.679 * -0.0947||-||0.327 * 1.4003|
|This Year (Jun16) TTM:||Last Year (Jun15) TTM:|
|Accounts Receivable was $179 Mil.|
Revenue was 232.706 + 231.617 + 414.66 + 264.019 = $1,143 Mil.
Gross Profit was 232.706 + 231.617 + 414.66 + 264.019 = $1,143 Mil.
Total Current Assets was $458 Mil.
Total Assets was $1,983 Mil.
Property, Plant and Equipment(Net PPE) was $0 Mil.
Depreciation, Depletion and Amortization(DDA) was $34 Mil.
Selling, General & Admin. Expense(SGA) was $869 Mil.
Total Current Liabilities was $531 Mil.
Long-Term Debt was $261 Mil.
Net Income was -14.445 + -8.526 + 54.708 + -14.245 = $17 Mil.
Non Operating Income was -13.391 + -37.115 + -16.38 + -61.555 = $-128 Mil.
Cash Flow from Operations was 154.089 + -135.94 + 147.12 + 168.471 = $334 Mil.
|Accounts Receivable was $188 Mil.
Revenue was 308.488 + 226.689 + 454.946 + 243.18 = $1,233 Mil.
Gross Profit was 308.488 + 226.689 + 454.946 + 243.18 = $1,233 Mil.
Total Current Assets was $422 Mil.
Total Assets was $2,209 Mil.
Property, Plant and Equipment(Net PPE) was $0 Mil.
Depreciation, Depletion and Amortization(DDA) was $29 Mil.
Selling, General & Admin. Expense(SGA) was $998 Mil.
Total Current Liabilities was $555 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)|
|=||(178.837 / 1143.002)||/||(188.051 / 1233.303)|
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)|
|=||(1233.303 / 1233.303)||/||(1143.002 / 1143.002)|
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 - (457.774 + 0) / 1983.177)||/||(1 - (421.963 + 0) / 2208.956)|
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))|
|=||(29.371 / (29.371 + 0))||/||(34.067 / (34.067 + 0))|
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)|
|=||(869.274 / 1143.002)||/||(997.994 / 1233.303)|
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)|
|=||((260.677 + 530.892) / 1983.177)||/||((75 + 554.627) / 2208.956)|
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|
|=||(17.492 - -128.441||-||333.74)||/||1983.177|
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 -3.10 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