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GuruFocus has detected 8 Warning Signs with Kennedy-Wilson Holdings Inc $KW.
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Kennedy-Wilson Holdings Inc (NYSE:KW)
Beneish M-Score
-2.36 (As of Today)

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 -2.36 suggests that the company is not a manipulator.

KW' s Beneish M-Score Range Over the Past 10 Years
Min: -3.47   Max: 3.14
Current: -2.36

-3.47
3.14

During the past 10 years, the highest Beneish M-Score of Kennedy-Wilson Holdings Inc was 3.14. The lowest was -3.47. And the median was -1.07.


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 * 1.1189+0.528 * 1.028+0.404 * 1.123+0.892 * 1.165+0.115 * 0.8455
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0025+4.679 * -0.0315-0.327 * 1.1145
=-2.36

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

This Year (Dec16) TTM:Last Year (Dec15) TTM:
Accounts Receivable was $71.3 Mil.
Revenue was 180.4 + 174.3 + 176.5 + 172.1 = $703.3 Mil.
Gross Profit was 171.4 + 171.8 + 167.3 + 170.7 = $681.2 Mil.
Total Current Assets was $1,044.7 Mil.
Total Assets was $7,659.1 Mil.
Property, Plant and Equipment(Net PPE) was $5,839.6 Mil.
Depreciation, Depletion and Amortization(DDA) was $198.2 Mil.
Selling, General & Admin. Expense(SGA) was $471.6 Mil.
Total Current Liabilities was $423.3 Mil.
Long-Term Debt was $4,892.7 Mil.
Net Income was 15.6 + -2 + -1.1 + -6.9 = $5.6 Mil.
Non Operating Income was 53.6 + 30 + 23.4 + 37.1 = $144.1 Mil.
Cash Flow from Operations was 24.5 + 67.9 + 19.4 + -8.9 = $102.9 Mil.
Accounts Receivable was $54.7 Mil.
Revenue was 166.3 + 159.2 + 140.5 + 137.7 = $603.7 Mil.
Gross Profit was 166.3 + 158.1 + 140.5 + 136.2 = $601.1 Mil.
Total Current Assets was $1,086.0 Mil.
Total Assets was $7,595.6 Mil.
Property, Plant and Equipment(Net PPE) was $5,825.4 Mil.
Depreciation, Depletion and Amortization(DDA) was $166.3 Mil.
Selling, General & Admin. Expense(SGA) was $403.8 Mil.
Total Current Liabilities was $414.2 Mil.
Long-Term Debt was $4,316.3 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)
=(71.3 / 703.3) / (54.7 / 603.7)
=0.10137921 / 0.09060792
=1.1189

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)
=(601.1 / 603.7) / (681.2 / 703.3)
=0.99569323 / 0.96857671
=1.028

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 - (1044.7 + 5839.6) / 7659.1) / (1 - (1086 + 5825.4) / 7595.6)
=0.10116071 / 0.09007847
=1.123

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
=703.3 / 603.7
=1.165

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))
=(166.3 / (166.3 + 5825.4)) / (198.2 / (198.2 + 5839.6))
=0.02775506 / 0.03282653
=0.8455

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)
=(471.6 / 703.3) / (403.8 / 603.7)
=0.67055311 / 0.66887527
=1.0025

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)
=((4892.7 + 423.3) / 7659.1) / ((4316.3 + 414.2) / 7595.6)
=0.69407633 / 0.62279478
=1.1145

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
=(5.6 - 144.1 - 102.9) / 7659.1
=-0.0315

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 -2.36 suggests that the company will not 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 local exchange's currency.

Kennedy-Wilson Holdings Inc Annual Data

Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15Dec16
DSRI 0.05764.03427.2090.17992.5061.03440.64961.1187
GMI 1.94640.66560.77691.02741.03340.98710.95221.028
AQI 0.98051.0240.90540.90540.9220.34160.52391.123
SGI 2.6760.5861.23871.06871.84013.2381.51461.1651
DEPI 0.68881.40210.81331.4170.6851.01280.86460.8455
SGAI 0.61181.87020.89411.25560.79720.69320.95941.0024
LVGI 0.96780.76841.33391.24580.91420.95331.19931.1145
TATA 0.0065-0.0475-0.0043-0.0345-0.0505-0.0399-0.032-0.0315
M-score -1.29-0.473.16-3.43-0.57-0.84-2.78-2.36

Kennedy-Wilson Holdings Inc Quarterly Data

Sep14Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16Dec16
DSRI 2.2941.0330.6330.67890.82810.64991.51790.97360.95821.1189
GMI 0.97530.98730.92040.94550.96330.95190.97791.00111.00411.028
AQI 0.23470.34161.0710.85150.86420.52390.62390.7930.7691.123
SGI 2.42783.24233.19712.57362.01391.51381.31571.26351.19031.165
DEPI 1.42351.01280.41710.41470.66530.86460.92290.91890.90870.8455
SGAI 0.76280.69230.68470.80910.8610.95991.03830.96271.00131.0025
LVGI 0.99880.95331.33841.22411.1371.19931.17981.13931.13981.1145
TATA -0.0544-0.0398-0.0297-0.0224-0.0282-0.032-0.0393-0.0304-0.0315-0.0315
M-score -0.50-0.84-1.13-1.67-2.00-2.79-2.14-2.54-2.64-2.36
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