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Kratos Defense & Security Solutions Inc (NAS:KTOS)
Beneish M-Score
-2.90 (As of Today)

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.

Kratos Defense & Security Solutions Inc has a M-score of -2.90 suggests that the company is not a manipulator.

KTOS' s 10-Year Beneish M-Score Range
Min: -5.95   Max: 1.94
Current: -2.9

-5.95
1.94

During the past 13 years, the highest Beneish M-Score of Kratos Defense & Security Solutions Inc was 1.94. The lowest was -5.95. And the median was -2.57.


Definition

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 Kratos Defense & Security Solutions Inc 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 * 0.8525+0.528 * 0.9823+0.404 * 1.0616+0.892 * 0.9021+0.115 * 0.8736
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0369+4.679 * -0.0385-0.327 * 1.0269
=-2.90

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.

This Year (Jun15) TTM:Last Year (Jun14) TTM:
Accounts Receivable was $204.5 Mil.
Revenue was 160.5 + 182.5 + 221.5 + 217.1 = $781.6 Mil.
Gross Profit was 40.9 + 46.9 + 56.2 + 53 = $197.0 Mil.
Total Current Assets was $353.2 Mil.
Total Assets was $1,102.6 Mil.
Property, Plant and Equipment(Net PPE) was $60.9 Mil.
Depreciation, Depletion and Amortization(DDA) was $36.9 Mil.
Selling, General & Admin. Expense(SGA) was $168.0 Mil.
Total Current Liabilities was $215.9 Mil.
Long-Term Debt was $663.0 Mil.
Net Income was -15 + -16.3 + -2.2 + -10.9 = $-44.4 Mil.
Non Operating Income was -1 + -0.4 + 0.6 + -0.4 = $-1.2 Mil.
Cash Flow from Operations was -12.2 + -2.9 + 25.9 + -11.6 = $-0.8 Mil.
Accounts Receivable was $265.9 Mil.
Revenue was 204.2 + 200.1 + 235.7 + 226.4 = $866.4 Mil.
Gross Profit was 48.1 + 52.6 + 61.5 + 52.3 = $214.5 Mil.
Total Current Assets was $398.5 Mil.
Total Assets was $1,172.1 Mil.
Property, Plant and Equipment(Net PPE) was $84.2 Mil.
Depreciation, Depletion and Amortization(DDA) was $41.4 Mil.
Selling, General & Admin. Expense(SGA) was $179.6 Mil.
Total Current Liabilities was $246.9 Mil.
Long-Term Debt was $662.9 Mil.



1. DSRI = Days Sales in Receivables Index

Measured as the ratio of days’ sales in receivables in year t to year t-1.

A large increase in DSR could be indicative of revenue inflation.

DSRI=(Receivables_t / Revenue_t) / (Receivables_t-1 / Revenue_t-1)
=(204.5 / 781.6) / (265.9 / 866.4)
=0.26164278 / 0.30690212
=0.8525

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.

GMI=GrossMargin_t-1 / GrossMargin_t
=(GrossProfit_t-1 / Revenue_t-1) / (GrossProfit_t / Revenue_t)
=(46.9 / 866.4) / (40.9 / 781.6)
=0.24757618 / 0.25204708
=0.9823

3. AQI = Asset Quality Index

AQI is the ratio of asset quality in year t to year t-1.

Asset quality is measured as the ratio of non-current assets other than plant, property and equipment to total assets.

AQI=(1 - (CurrentAssets_t + PPE_t) / TotalAssets_t) / (1 - (CurrentAssets_t-1 + PPE_t-1) / TotalAssets_t-1)
=(1 - (353.2 + 60.9) / 1102.6) / (1 - (398.5 + 84.2) / 1172.1)
=0.62443316 / 0.58817507
=1.0616

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.

SGI=Sales_t / Sales_t-1
=Revenue_t / Revenue_t-1
=781.6 / 866.4
=0.9021

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))
=(41.4 / (41.4 + 84.2)) / (36.9 / (36.9 + 60.9))
=0.32961783 / 0.37730061
=0.8736

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)
=(168 / 781.6) / (179.6 / 866.4)
=0.21494371 / 0.20729455
=1.0369

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)
=((663 + 215.9) / 1102.6) / ((662.9 + 246.9) / 1172.1)
=0.79711591 / 0.77621363
=1.0269

8. TATA = Total Accruals to Total Assets

Total accruals calculated as the change in working capital accounts other than cash less depreciation.

TATA=(IncomefromContinuingOperations_t - CashFlowsfromOperations_t) / TotalAssets_t
=(NetIncome_t - NonOperatingIncome_t - CashFlowsfromOperations_t) / TotalAssets_t
=(-44.4 - -1.2 - -0.8) / 1102.6
=-0.0385

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.

Kratos Defense & Security Solutions Inc has a M-score of -2.90 suggests that the company will not be a manipulator.


Related Terms

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


Historical Data

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.

Kratos Defense & Security Solutions Inc Annual Data

Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14
DSRI 1.45790.58991.02680.84690.69761.31061.12540.80950.99670.5422
GMI 0.9751.27311.15650.80270.98160.94030.82891.00161.05111.0043
AQI 1.31871.26621.16920.91970.94361.05260.98420.97440.99651.0376
SGI 0.51421.00531.26451.47831.16881.22121.77011.34030.98080.9131
DEPI 1.30650.57451.13350.72050.78742.16650.78740.98221.04531.2027
SGAI 1.38361.07881.09890.61830.92380.9771.27781.0111.0190.9839
LVGI 0.99231.33741.0971.07740.92661.37031.11061.01251.01741.062
TATA -0.0146-0.1134-0.1077-0.3326-0.2666-0.0278-0.0222-0.1319-0.0481-0.0414
M-score -2.47-3.30-2.61-3.88-3.87-2.12-1.99-2.99-2.70-3.15

Kratos Defense & Security Solutions Inc Quarterly Data

Mar13Jun13Sep13Dec13Mar14Jun14Sep14Dec14Mar15Jun15
DSRI 0.87410.83010.90831.00290.99291.24391.08210.55811.04610.8525
GMI 1.04171.04241.06311.04711.03761.05391.00341.0141.02140.9823
AQI 0.99481.08590.95820.99651.0150.99711.03221.03761.02881.0616
SGI 1.24191.18971.05240.97480.88630.84290.87640.88720.91970.9021
DEPI 1.06951.06171.02961.04531.11721.26731.18691.20271.15560.8736
SGAI 0.93740.95590.9761.02121.07141.04551.03180.97870.96861.0369
LVGI 1.00851.07591.09311.01741.01981.07271.05611.0621.06561.0269
TATA -0.1189-0.136-0.1204-0.0482-0.0508-0.0427-0.0311-0.0411-0.0382-0.0385
M-score -2.90-3.06-3.09-2.71-2.81-2.57-2.65-3.15-2.66-2.90
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