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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 -1.44. The lowest was -7.52. And the median was -2.79.
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 * 0.5493||+||0.528 * 1||+||0.404 * 1.1066||+||0.892 * 1.4323||+||0.115 * 1.3537|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.1886||+||4.679 * -0.0312||-||0.327 * 1.4886|
|This Year (Dec14) TTM:||Last Year (Dec13) TTM:|
|Accounts Receivable was $320 Mil.|
Revenue was 670.578 + 403.76 + 427.313 + 310.166 = $1,812 Mil.
Gross Profit was 670.578 + 403.76 + 427.313 + 310.166 = $1,812 Mil.
Total Current Assets was $1,062 Mil.
Total Assets was $5,935 Mil.
Property, Plant and Equipment(Net PPE) was $284 Mil.
Depreciation, Depletion and Amortization(DDA) was $81 Mil.
Selling, General & Admin. Expense(SGA) was $1,496 Mil.
Total Current Liabilities was $1,053 Mil.
Long-Term Debt was $1,556 Mil.
Net Income was 61.368 + 4.438 + 31.22 + 2.936 = $100 Mil.
Non Operating Income was -1.846 + 10.542 + 27.38 + 9.13 = $45 Mil.
Cash Flow from Operations was 160.204 + 160.72 + 17.47 + -98.529 = $240 Mil.
|Accounts Receivable was $407 Mil.
Revenue was 565.535 + 232.019 + 223.074 + 244.355 = $1,265 Mil.
Gross Profit was 565.535 + 232.019 + 223.074 + 244.355 = $1,265 Mil.
Total Current Assets was $772 Mil.
Total Assets was $2,674 Mil.
Property, Plant and Equipment(Net PPE) was $34 Mil.
Depreciation, Depletion and Amortization(DDA) was $15 Mil.
Selling, General & Admin. Expense(SGA) was $879 Mil.
Total Current Liabilities was $790 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)|
|=||(320.318 / 1811.817)||/||(407.124 / 1264.983)|
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)|
|=||(403.76 / 1264.983)||/||(670.578 / 1811.817)|
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 - (1061.796 + 283.786) / 5934.886)||/||(1 - (771.707 + 33.844) / 2674.432)|
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))|
|=||(14.59 / (14.59 + 33.844))||/||(81.224 / (81.224 + 283.786))|
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)|
|=||(1495.586 / 1811.817)||/||(878.531 / 1264.983)|
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)|
|=||((1556.482 + 1052.695) / 5934.886)||/||((0 + 789.853) / 2674.432)|
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|
|=||(99.962 - 45.206||-||239.865)||/||5934.886|
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 -2.76 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