Switch to:
Kratos Defense & Security Solutions Inc (NAS:KTOS)
Beneish M-Score
-2.23 (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 -2.23 suggests that the company is not a manipulator.

KTOS' s Beneish M-Score Range Over the Past 10 Years
Min: -5.95   Max: 1.96
Current: -2.23

-5.95
1.96

During the past 13 years, the highest Beneish M-Score of Kratos Defense & Security Solutions Inc was 1.96. 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 * 1.1402+0.528 * 1.0232+0.404 * 0.988+0.892 * 0.7675+0.115 * 1.0586
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.1398+4.679 * 0.0634-0.327 * 0.8807
=-2.23

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

This Year (Mar16) TTM:Last Year (Mar15) TTM:
Accounts Receivable was $208.8 Mil.
Revenue was 153 + 177.5 + 161.7 + 160.5 = $652.7 Mil.
Gross Profit was 35.9 + 42.2 + 40.4 + 40.9 = $159.4 Mil.
Total Current Assets was $305.3 Mil.
Total Assets was $884.4 Mil.
Property, Plant and Equipment(Net PPE) was $53.8 Mil.
Depreciation, Depletion and Amortization(DDA) was $23.1 Mil.
Selling, General & Admin. Expense(SGA) was $151.0 Mil.
Total Current Liabilities was $170.3 Mil.
Long-Term Debt was $444.4 Mil.
Net Income was -22.2 + -4 + 55.1 + -15 = $13.9 Mil.
Non Operating Income was 0.3 + -0.1 + -3.1 + -1 = $-3.9 Mil.
Cash Flow from Operations was -11.5 + -6.3 + -8.3 + -12.2 = $-38.3 Mil.
Accounts Receivable was $238.6 Mil.
Revenue was 182.5 + 221.5 + 217.1 + 229.3 = $850.4 Mil.
Gross Profit was 46.9 + 56.2 + 53 + 56.4 = $212.5 Mil.
Total Current Assets was $366.2 Mil.
Total Assets was $1,122.6 Mil.
Property, Plant and Equipment(Net PPE) was $81.5 Mil.
Depreciation, Depletion and Amortization(DDA) was $38.0 Mil.
Selling, General & Admin. Expense(SGA) was $172.6 Mil.
Total Current Liabilities was $223.0 Mil.
Long-Term Debt was $663.0 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)
=(208.8 / 652.7) / (238.6 / 850.4)
=0.31990195 / 0.28057385
=1.1402

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)
=(42.2 / 850.4) / (35.9 / 652.7)
=0.24988241 / 0.24421633
=1.0232

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 - (305.3 + 53.8) / 884.4) / (1 - (366.2 + 81.5) / 1122.6)
=0.59396201 / 0.60119366
=0.988

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
=652.7 / 850.4
=0.7675

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))
=(38 / (38 + 81.5)) / (23.1 / (23.1 + 53.8))
=0.31799163 / 0.30039012
=1.0586

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)
=(151 / 652.7) / (172.6 / 850.4)
=0.23134671 / 0.20296331
=1.1398

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)
=((444.4 + 170.3) / 884.4) / ((663 + 223) / 1122.6)
=0.69504749 / 0.78923927
=0.8807

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
=(13.9 - -3.9 - -38.3) / 884.4
=0.0634

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 -2.23 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

Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15
DSRI 0.67892.19860.81530.72471.31061.12540.80950.99670.54222.0758
GMI 1.37630.99990.81560.9660.94030.82891.00161.05111.00431.0209
AQI 1.26621.16920.91970.94361.05260.98420.97440.99651.03760.9746
SGI 0.87340.59061.53561.12511.22121.77011.34030.98080.91310.757
DEPI 0.71631.39180.71150.79742.16650.78740.98221.04531.20271.0294
SGAI 1.04081.43790.62930.90770.9771.27781.0111.0190.98391.148
LVGI 1.33741.0971.07740.92661.37031.11061.01251.01741.0620.8742
TATA -0.1827-0.1157-0.3323-0.2666-0.0278-0.0222-0.1319-0.0481-0.04140.0593
M-score -3.59-2.28-3.85-3.89-2.12-1.99-2.99-2.70-3.15-1.41

Kratos Defense & Security Solutions Inc Quarterly Data

Dec13Mar14Jun14Sep14Dec14Mar15Jun15Sep15Dec15Mar16
DSRI 1.00290.99291.20891.05130.54191.01530.87720.92721.99941.1402
GMI 1.04711.03761.0440.99451.00441.01140.99150.99771.00641.0232
AQI 0.99651.0150.99711.03221.03761.02881.06160.99680.97460.988
SGI 0.97480.88630.86730.9020.91360.94760.87670.82320.78590.7675
DEPI 1.04531.11721.2011.18691.20271.15560.98191.03141.02941.0586
SGAI 1.02121.07141.04211.02840.97630.96571.04031.04751.14391.1398
LVGI 1.01741.01981.07271.05611.0621.06561.02690.88820.87420.8807
TATA -0.0482-0.0504-0.0398-0.0314-0.0414-0.039-0.04180.0250.05990.0634
M-score -2.71-2.80-2.58-2.66-3.15-2.68-2.90-2.56-1.46-2.23
Get WordPress Plugins for easy affiliate links on Stock Tickers and Guru Names | Earn affiliate commissions by embedding GuruFocus Charts
GuruFocus Affiliate Program: Earn up to $400 per referral. ( Learn More)
FEEDBACK