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Kennedy-Wilson Holdings Inc (NYSE:KW)
Beneish M-Score
-0.50 (As of Today)

Warning Sign:

Beneish M-Score -0.50 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.

Kennedy-Wilson Holdings Inc has a M-score of -0.50 signals that the company is a manipulator.

KW' s 10-Year Beneish M-Score Range
Min: -3.95   Max: 1628.83
Current: -0.5

-3.95
1628.83

During the past 7 years, the highest Beneish M-Score of Kennedy-Wilson Holdings Inc was 1628.83. The lowest was -3.95. And the median was -1.99.


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 Kennedy-Wilson Holdings 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 * 2.2546+0.528 * 0.9738+0.404 * 0.2347+0.892 * 2.4702+0.115 * 1.4235
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.7497+4.679 * -0.0543-0.327 * 0.9988
=-0.50

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

This Year (Sep14) TTM:Last Year (Sep13) TTM:
Accounts Receivable was $33.7 Mil.
Revenue was 113.7 + 92 + 51.5 + 28.4 = $285.6 Mil.
Gross Profit was 112.6 + 88.1 + 41.8 + 28.4 = $270.9 Mil.
Total Current Assets was $1,136.5 Mil.
Total Assets was $5,713.3 Mil.
Property, Plant and Equipment(Net PPE) was $3,861.0 Mil.
Depreciation, Depletion and Amortization(DDA) was $72.7 Mil.
Selling, General & Admin. Expense(SGA) was $220.3 Mil.
Total Current Liabilities was $261.2 Mil.
Long-Term Debt was $2,748.3 Mil.
Net Income was -0.2 + 38.4 + 12.5 + -2.3 = $48.4 Mil.
Non Operating Income was 21.7 + 80.5 + 81 + 41.1 = $224.3 Mil.
Cash Flow from Operations was 20.6 + 102 + -36.9 + 48.4 = $134.1 Mil.
Accounts Receivable was $6.1 Mil.
Revenue was 33.5 + 36.4 + 22.8 + 22.92 = $115.6 Mil.
Gross Profit was 32.6 + 31.3 + 20.9 + 21.995 = $106.8 Mil.
Total Current Assets was $247.1 Mil.
Total Assets was $1,641.2 Mil.
Property, Plant and Equipment(Net PPE) was $518.0 Mil.
Depreciation, Depletion and Amortization(DDA) was $14.0 Mil.
Selling, General & Admin. Expense(SGA) was $119.0 Mil.
Total Current Liabilities was $116.0 Mil.
Long-Term Debt was $749.6 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)
=(33.7 / 285.6) / (6.051 / 115.62)
=0.1179972 / 0.05233524
=2.2546

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)
=(88.1 / 115.62) / (112.6 / 285.6)
=0.92367238 / 0.94852941
=0.9738

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 - (1136.5 + 3861) / 5713.3) / (1 - (247.084 + 518.047) / 1641.194)
=0.12528661 / 0.53379613
=0.2347

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
=285.6 / 115.62
=2.4702

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))
=(13.997 / (13.997 + 518.047)) / (72.7 / (72.7 + 3861))
=0.02630797 / 0.01848133
=1.4235

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)
=(220.3 / 285.6) / (118.957 / 115.62)
=0.77135854 / 1.02886179
=0.7497

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)
=((2748.3 + 261.2) / 5713.3) / ((749.562 + 115.973) / 1641.194)
=0.52675336 / 0.52738128
=0.9988

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
=(48.4 - 224.3 - 134.1) / 5713.3
=-0.0543

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.

Kennedy-Wilson Holdings Inc has a M-score of -0.50 signals that the company is likely to 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.

Kennedy-Wilson Holdings Inc Annual Data

Dec07Dec08Dec09Dec10Dec11Dec12Dec13
DSRI 7.20520.18780.7639
GMI 0.77681.0291.033
AQI 0.90540.90540.8944
SGI 1.23941.02341.8908
DEPI 0.80631.42940.6566
SGAI 0.8931.3120.7758
LVGI 1.33391.24580.9142
TATA -0.0082-0.0324-0.05
M-score 3.13-3.47-2.13

Kennedy-Wilson Holdings Inc Quarterly Data

Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14
DSRI 1.40971.14730.18780.97820.27621.14340.76460.32862.36232.2546
GMI 0.8160.83421.03551.05781.10441.06391.03311.05610.97430.9738
AQI 1.19271.04920.90540.87360.84540.89310.89440.31390.24060.2347
SGI 1.48921.50911.02341.1421.36481.56671.88921.99552.10972.4702
DEPI 0.50010.57441.42941.66651.56761.28440.65661.51321.78311.4235
SGAI 0.82290.8951.30381.23341.09911.02070.77640.78560.77970.7497
LVGI 0.97860.81571.24581.13270.71971.23810.91420.75191.33190.9988
TATA -0.0608-0.0494-0.0406-0.0233-0.0032-0.0107-0.0499-0.0312-0.0519-0.0543
M-score -1.99-2.16-3.50-2.51-2.70-1.95-2.14-2.43-0.78-0.50
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