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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.
Fortress Investment Group LLC has a M-score of -1.29 signals that the company is a manipulator.
During the past 13 years, the highest Beneish M-Score of Fortress Investment Group LLC was -1.29. The lowest was -7.52. And the median was -3.62.
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 * 0.7806||+||0.528 * 1||+||0.404 * 0.9521||+||0.892 * 1.2765||+||0.115 * 13.8104|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.8149||+||4.679 * -0.0624||-||0.327 * 1.15|
|This Year (Mar14) TTM:||Last Year (Mar13) TTM:|
|Accounts Receivable was $144 Mil.|
Revenue was 310.166 + 565.535 + 232.019 + 223.074 = $1,331 Mil.
Gross Profit was 310.166 + 565.535 + 232.019 + 223.074 = $1,331 Mil.
Total Current Assets was $358 Mil.
Total Assets was $2,899 Mil.
Property, Plant and Equipment(Net PPE) was $267 Mil.
Depreciation, Depletion and Amortization(DDA) was $21 Mil.
Selling, General & Admin. Expense(SGA) was $915 Mil.
Total Current Liabilities was $543 Mil.
Long-Term Debt was $307 Mil.
Net Income was 2.936 + 145.813 + 42.381 + -2.076 = $189 Mil.
Non Operating Income was 9.13 + 18.658 + 68.011 + 25.505 = $121 Mil.
Cash Flow from Operations was -98.529 + 100.383 + 140.439 + 106.421 = $249 Mil.
|Accounts Receivable was $144 Mil.
Revenue was 244.355 + 417.64 + 181.523 + 199.048 = $1,043 Mil.
Gross Profit was 244.355 + 417.64 + 181.523 + 199.048 = $1,043 Mil.
Total Current Assets was $390 Mil.
Total Assets was $2,211 Mil.
Property, Plant and Equipment(Net PPE) was $0 Mil.
Depreciation, Depletion and Amortization(DDA) was $17 Mil.
Selling, General & Admin. Expense(SGA) was $880 Mil.
Total Current Liabilities was $454 Mil.
Long-Term Debt was $109 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)|
|=||(143.603 / 1330.794)||/||(144.122 / 1042.566)|
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)|
|=||(565.535 / 1042.566)||/||(310.166 / 1330.794)|
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 - (358.407 + 267.289) / 2898.545)||/||(1 - (390.079 + 0) / 2210.789)|
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))|
|=||(17.299 / (17.299 + 0))||/||(20.865 / (20.865 + 267.289))|
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)|
|=||(914.912 / 1330.794)||/||(879.54 / 1042.566)|
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)|
|=||((306.978 + 543.186) / 2898.545)||/||((109.453 + 454.432) / 2210.789)|
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|
|=||(189.054 - 121.304||-||248.714)||/||2898.545|
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 -1.29 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