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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 9 years, the highest Beneish M-Score of Kennedy-Wilson Holdings Inc was 2453.21. The lowest was -3.36. And the median was -2.00.
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 * 0.9736||+||0.528 * 1.0011||+||0.404 * 0.793||+||0.892 * 1.2635||+||0.115 * 0.9189|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9627||+||4.679 * -0.0304||-||0.327 * 1.1393|
|This Year (Jun16) TTM:||Last Year (Jun15) TTM:|
|Accounts Receivable was $79.1 Mil.|
Revenue was 176.5 + 172.1 + 166.3 + 159.2 = $674.1 Mil.
Gross Profit was 167.3 + 170.7 + 166.3 + 158.1 = $662.4 Mil.
Total Current Assets was $1,086.4 Mil.
Total Assets was $7,696.3 Mil.
Property, Plant and Equipment(Net PPE) was $5,920.7 Mil.
Depreciation, Depletion and Amortization(DDA) was $189.0 Mil.
Selling, General & Admin. Expense(SGA) was $440.2 Mil.
Total Current Liabilities was $436.5 Mil.
Long-Term Debt was $4,695.7 Mil.
Net Income was -1.1 + -6.9 + 29 + 15.4 = $36.4 Mil.
Non Operating Income was 23.4 + 37.1 + 36.8 + 22 = $119.3 Mil.
Cash Flow from Operations was 19.4 + -8.9 + 64 + 76.9 = $151.4 Mil.
|Accounts Receivable was $64.3 Mil.
Revenue was 140.5 + 137.7 + 141.6 + 113.7 = $533.5 Mil.
Gross Profit was 140.5 + 136.2 + 135.5 + 112.6 = $524.8 Mil.
Total Current Assets was $1,510.0 Mil.
Total Assets was $7,347.0 Mil.
Property, Plant and Equipment(Net PPE) was $5,007.3 Mil.
Depreciation, Depletion and Amortization(DDA) was $146.5 Mil.
Selling, General & Admin. Expense(SGA) was $361.9 Mil.
Total Current Liabilities was $320.0 Mil.
Long-Term Debt was $3,980.4 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)|
|=||(79.1 / 674.1)||/||(64.3 / 533.5)|
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)|
|=||(524.8 / 533.5)||/||(662.4 / 674.1)|
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 - (1086.4 + 5920.7) / 7696.3)||/||(1 - (1510 + 5007.3) / 7347)|
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))|
|=||(146.5 / (146.5 + 5007.3))||/||(189 / (189 + 5920.7))|
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)|
|=||(440.2 / 674.1)||/||(361.9 / 533.5)|
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)|
|=||((4695.7 + 436.5) / 7696.3)||/||((3980.4 + 320) / 7347)|
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|
|=||(36.4 - 119.3||-||151.4)||/||7696.3|
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 -2.54 suggests that the company will not 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