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Kennedy-Wilson Holdings Inc (NYSE:KW)
Beneish M-Score
-0.84 (As of Today)

Warning Sign:

Beneish M-Score -0.84 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 -0.84 signals that the company is a manipulator.

KW' s 10-Year Beneish M-Score Range
Min: -3.5   Max: 3.12
Current: -0.84

-3.5
3.12

During the past 8 years, the highest Beneish M-Score of Kennedy-Wilson Holdings Inc was 3.12. The lowest was -3.50. And the median was -0.59.


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 * 1.033+0.528 * 0.9873+0.404 * 0.3416+0.892 * 3.2423+0.115 * 1.0128
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.6923+4.679 * -0.0398-0.327 * 0.9533
=-0.84

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

This Year (Dec14) TTM:Last Year (Dec13) TTM:
Accounts Receivable was $55.6 Mil.
Revenue was 141.6 + 113.7 + 92 + 51.5 = $398.8 Mil.
Gross Profit was 135.5 + 112.6 + 88.1 + 41.8 = $378.0 Mil.
Total Current Assets was $993.3 Mil.
Total Assets was $6,332.1 Mil.
Property, Plant and Equipment(Net PPE) was $4,250.1 Mil.
Depreciation, Depletion and Amortization(DDA) was $104.5 Mil.
Selling, General & Admin. Expense(SGA) was $277.9 Mil.
Total Current Liabilities was $264.9 Mil.
Long-Term Debt was $3,023.3 Mil.
Net Income was -28.8 + -0.2 + 38.4 + 12.5 = $21.9 Mil.
Non Operating Income was -7.1 + 21.7 + 80.5 + 81 = $176.1 Mil.
Cash Flow from Operations was 12.4 + 20.6 + 102 + -36.9 = $98.1 Mil.
Accounts Receivable was $16.6 Mil.
Revenue was 30.3 + 33.5 + 36.4 + 22.8 = $123.0 Mil.
Gross Profit was 30.3 + 32.6 + 31.3 + 20.9 = $115.1 Mil.
Total Current Assets was $194.8 Mil.
Total Assets was $1,798.8 Mil.
Property, Plant and Equipment(Net PPE) was $698.5 Mil.
Depreciation, Depletion and Amortization(DDA) was $17.4 Mil.
Selling, General & Admin. Expense(SGA) was $123.8 Mil.
Total Current Liabilities was $129.1 Mil.
Long-Term Debt was $850.8 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)
=(55.6 / 398.8) / (16.6 / 123)
=0.13941825 / 0.13495935
=1.033

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.

GMI=GrossMargin_t-1 / GrossMargin_t
=(GrossProfit_t-1 / Revenue_t-1) / (GrossProfit_t / Revenue_t)
=(112.6 / 123) / (135.5 / 398.8)
=0.93577236 / 0.94784353
=0.9873

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 - (993.3 + 4250.1) / 6332.1) / (1 - (194.8 + 698.5) / 1798.8)
=0.17193348 / 0.50339115
=0.3416

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
=398.8 / 123
=3.2423

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))
=(17.4 / (17.4 + 698.5)) / (104.5 / (104.5 + 4250.1))
=0.02430507 / 0.02399761
=1.0128

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)
=(277.9 / 398.8) / (123.8 / 123)
=0.69684052 / 1.00650407
=0.6923

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)
=((3023.3 + 264.9) / 6332.1) / ((850.8 + 129.1) / 1798.8)
=0.5192906 / 0.54475206
=0.9533

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
=(21.9 - 176.1 - 98.1) / 6332.1
=-0.0398

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 -0.84 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

Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14
DSRI 7.20520.18782.40111.0344
GMI 0.77681.0291.03190.9871
AQI 0.90540.90540.9220.3416
SGI 1.23941.02341.92043.238
DEPI 0.80631.42940.6851.0128
SGAI 0.8931.3120.76380.6932
LVGI 1.33391.24580.91420.9533
TATA -0.0082-0.0324-0.0505-0.0399
M-score 3.13-3.47-0.59-0.84

Kennedy-Wilson Holdings Inc Quarterly Data

Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14Dec14
DSRI 1.14730.18780.97820.27621.14342.4030.32452.34072.23971.033
GMI 0.83421.03551.05781.10441.06391.0321.05450.97360.97340.9873
AQI 1.04920.90540.87360.84540.89310.9220.31390.24060.23470.3416
SGI 1.50911.02341.1421.36481.56671.91892.02082.12922.48663.2423
DEPI 0.57441.42941.66651.56761.28440.6851.51321.78311.42351.0128
SGAI 0.8951.30381.23341.09911.02070.76440.77580.77260.74480.6923
LVGI 0.81571.24581.13270.71971.23810.91420.75191.33190.99880.9533
TATA -0.0494-0.0406-0.0233-0.0032-0.0107-0.0504-0.0314-0.0521-0.0544-0.0398
M-score -2.16-3.50-2.51-2.70-1.95-0.59-2.41-0.78-0.50-0.84
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