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Beneish M-Score 1.15 higher than -2.22, which implies that it might have manipulated its financial results.
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 1.15. The lowest was -7.77. And the median was -3.39.
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 * 5.5643||+||0.528 * 1||+||0.404 * 1.5322||+||0.892 * 0.8611||+||0.115 * 0.1324|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.5411||+||4.679 * -0.1158||-||0.327 * 0.7725|
|This Year (Sep15) TTM:||Last Year (Sep14) TTM:|
|Accounts Receivable was $196 Mil.|
Revenue was 264.019 + 308.488 + 226.689 + 670.578 = $1,470 Mil.
Gross Profit was 264.019 + 308.488 + 226.689 + 670.578 = $1,470 Mil.
Total Current Assets was $533 Mil.
Total Assets was $2,277 Mil.
Property, Plant and Equipment(Net PPE) was $0 Mil.
Depreciation, Depletion and Amortization(DDA) was $75 Mil.
Selling, General & Admin. Expense(SGA) was $1,373 Mil.
Total Current Liabilities was $626 Mil.
Long-Term Debt was $75 Mil.
Net Income was -14.245 + 3.316 + 34.713 + 61.368 = $85 Mil.
Non Operating Income was -62.473 + -50.608 + 207.669 + -1.846 = $93 Mil.
Cash Flow from Operations was 168.471 + 81.012 + -153.551 + 160.204 = $256 Mil.
|Accounts Receivable was $41 Mil.
Revenue was 403.76 + 427.313 + 310.166 + 565.535 = $1,707 Mil.
Gross Profit was 403.76 + 427.313 + 310.166 + 565.535 = $1,707 Mil.
Total Current Assets was $1,331 Mil.
Total Assets was $3,243 Mil.
Property, Plant and Equipment(Net PPE) was $290 Mil.
Depreciation, Depletion and Amortization(DDA) was $44 Mil.
Selling, General & Admin. Expense(SGA) was $1,035 Mil.
Total Current Liabilities was $1,061 Mil.
Long-Term Debt was $232 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)|
|=||(195.619 / 1469.774)||/||(40.825 / 1706.774)|
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)|
|=||(308.488 / 1706.774)||/||(264.019 / 1469.774)|
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 - (532.728 + 0) / 2276.714)||/||(1 - (1331.005 + 290.481) / 3242.545)|
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))|
|=||(44.328 / (44.328 + 290.481))||/||(74.889 / (74.889 + 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)|
|=||(1373.015 / 1469.774)||/||(1034.617 / 1706.774)|
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)|
|=||((75 + 626.177) / 2276.714)||/||((232.275 + 1060.529) / 3242.545)|
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|
|=||(85.152 - 92.742||-||256.136)||/||2276.714|
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 1.15 signals that the company is likely to 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