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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.
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.
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|
|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
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)|
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)|
|=||(112.6 / 123)||/||(135.5 / 398.8)|
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 - (993.3 + 4250.1) / 6332.1)||/||(1 - (194.8 + 698.5) / 1798.8)|
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))|
|=||(17.4 / (17.4 + 698.5))||/||(104.5 / (104.5 + 4250.1))|
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)|
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)|
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|
|=||(21.9 - 176.1||-||98.1)||/||6332.1|
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.
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