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Beneish M-Score -1.13 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 8 years, the highest Beneish M-Score of Kennedy-Wilson Holdings Inc was 1628.83. The lowest was -4.00. And the median was -1.89.
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 * 0.633||+||0.528 * 0.9204||+||0.404 * 1.071||+||0.892 * 3.1971||+||0.115 * 0.4171|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.6847||+||4.679 * -0.0297||-||0.327 * 1.3384|
|This Year (Mar15) TTM:||Last Year (Mar14) TTM:|
|Accounts Receivable was $34.2 Mil.|
Revenue was 137.7 + 141.6 + 113.7 + 92 = $485.0 Mil.
Gross Profit was 136.2 + 135.5 + 112.6 + 88.1 = $472.4 Mil.
Total Current Assets was $727.5 Mil.
Total Assets was $6,680.6 Mil.
Property, Plant and Equipment(Net PPE) was $4,776.4 Mil.
Depreciation, Depletion and Amortization(DDA) was $133.8 Mil.
Selling, General & Admin. Expense(SGA) was $317.4 Mil.
Total Current Liabilities was $242.3 Mil.
Long-Term Debt was $3,375.1 Mil.
Net Income was -1.5 + -28.8 + -0.2 + 38.4 = $7.9 Mil.
Non Operating Income was -7.5 + -7.1 + 21.7 + 80.5 = $87.6 Mil.
Cash Flow from Operations was -16.6 + 12.4 + 20.6 + 102 = $118.4 Mil.
|Accounts Receivable was $16.9 Mil.
Revenue was 51.5 + 30.3 + 33.5 + 36.4 = $151.7 Mil.
Gross Profit was 41.8 + 30.3 + 32.6 + 31.3 = $136.0 Mil.
Total Current Assets was $1,803.5 Mil.
Total Assets was $4,407.2 Mil.
Property, Plant and Equipment(Net PPE) was $1,878.9 Mil.
Depreciation, Depletion and Amortization(DDA) was $21.6 Mil.
Selling, General & Admin. Expense(SGA) was $145.0 Mil.
Total Current Liabilities was $181.6 Mil.
Long-Term Debt was $1,601.4 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)|
|=||(34.2 / 485)||/||(16.9 / 151.7)|
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)|
|=||(135.5 / 151.7)||/||(136.2 / 485)|
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 - (727.5 + 4776.4) / 6680.6)||/||(1 - (1803.5 + 1878.9) / 4407.2)|
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))|
|=||(21.6 / (21.6 + 1878.9))||/||(133.8 / (133.8 + 4776.4))|
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)|
|=||(317.4 / 485)||/||(145 / 151.7)|
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)|
|=||((3375.1 + 242.3) / 6680.6)||/||((1601.4 + 181.6) / 4407.2)|
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|
|=||(7.9 - 87.6||-||118.4)||/||6680.6|
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 -1.13 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
Kennedy-Wilson Holdings Inc Annual Data
Kennedy-Wilson Holdings Inc Quarterly Data