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Beneish M-Score -0.18 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 -0.18. The lowest was -7.77. And the median was -3.42.
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 * 4.3424||+||0.528 * 1||+||0.404 * 1.0805||+||0.892 * 1.0485||+||0.115 * 0.1108|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.4825||+||4.679 * -0.1405||-||0.327 * 1.0205|
|This Year (Jun15) TTM:||Last Year (Jun14) TTM:|
|Accounts Receivable was $188 Mil.|
Revenue was 308.488 + 226.689 + 670.578 + 403.76 = $1,610 Mil.
Gross Profit was 308.488 + 226.689 + 670.578 + 403.76 = $1,610 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 $75 Mil.
Selling, General & Admin. Expense(SGA) was $1,449 Mil.
Total Current Liabilities was $555 Mil.
Long-Term Debt was $75 Mil.
Net Income was 3.316 + 34.713 + 61.368 + 4.438 = $104 Mil.
Non Operating Income was -50.608 + 207.669 + -1.846 + 10.542 = $166 Mil.
Cash Flow from Operations was 81.012 + -153.551 + 160.204 + 160.72 = $248 Mil.
|Accounts Receivable was $41 Mil.
Revenue was 427.313 + 310.166 + 565.535 + 232.019 = $1,535 Mil.
Gross Profit was 427.313 + 310.166 + 565.535 + 232.019 = $1,535 Mil.
Total Current Assets was $484 Mil.
Total Assets was $2,955 Mil.
Property, Plant and Equipment(Net PPE) was $258 Mil.
Depreciation, Depletion and Amortization(DDA) was $32 Mil.
Selling, General & Admin. Expense(SGA) was $932 Mil.
Total Current Liabilities was $558 Mil.
Long-Term Debt was $267 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)|
|=||(188.051 / 1609.515)||/||(41.302 / 1535.033)|
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)|
|=||(226.689 / 1535.033)||/||(308.488 / 1609.515)|
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 - (421.963 + 0) / 2208.956)||/||(1 - (484.104 + 258.498) / 2955.397)|
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))|
|=||(32.199 / (32.199 + 258.498))||/||(75.028 / (75.028 + 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)|
|=||(1448.58 / 1609.515)||/||(931.91 / 1535.033)|
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 + 554.627) / 2208.956)||/||((267.398 + 558.073) / 2955.397)|
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|
|=||(103.835 - 165.757||-||248.385)||/||2208.956|
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 -0.18 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