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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 * 0.8281||+||0.528 * 0.9633||+||0.404 * 0.8642||+||0.892 * 2.0139||+||0.115 * 0.6653|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.861||+||4.679 * -0.0282||-||0.327 * 1.137|
|This Year (Sep15) TTM:||Last Year (Sep14) TTM:|
|Accounts Receivable was $56.2 Mil.|
Revenue was 159.2 + 140.5 + 137.7 + 141.6 = $579.0 Mil.
Gross Profit was 158.1 + 140.5 + 136.2 + 135.5 = $570.3 Mil.
Total Current Assets was $1,019.1 Mil.
Total Assets was $7,292.7 Mil.
Property, Plant and Equipment(Net PPE) was $5,484.0 Mil.
Depreciation, Depletion and Amortization(DDA) was $156.7 Mil.
Selling, General & Admin. Expense(SGA) was $382.0 Mil.
Total Current Liabilities was $368.8 Mil.
Long-Term Debt was $3,999.1 Mil.
Net Income was 15.4 + 31.8 + -1.5 + -28.8 = $16.9 Mil.
Non Operating Income was 22 + 88.4 + -7.5 + -7.1 = $95.8 Mil.
Cash Flow from Operations was 76.9 + 53.9 + -16.6 + 12.4 = $126.6 Mil.
|Accounts Receivable was $33.7 Mil.
Revenue was 113.7 + 92 + 51.5 + 30.3 = $287.5 Mil.
Gross Profit was 112.6 + 88.1 + 41.8 + 30.3 = $272.8 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.
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)|
|=||(56.2 / 579)||/||(33.7 / 287.5)|
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)|
|=||(140.5 / 287.5)||/||(158.1 / 579)|
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 - (1019.1 + 5484) / 7292.7)||/||(1 - (1136.5 + 3861) / 5713.3)|
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))|
|=||(72.7 / (72.7 + 3861))||/||(156.7 / (156.7 + 5484))|
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)|
|=||(382 / 579)||/||(220.3 / 287.5)|
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)|
|=||((3999.1 + 368.8) / 7292.7)||/||((2748.3 + 261.2) / 5713.3)|
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|
|=||(16.9 - 95.8||-||126.6)||/||7292.7|
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 -2.00 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