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Kennedy-Wilson Holdings Inc (NYSE:KW)
Beneish M-Score
-0.53 (As of Today)

Warning Sign:

Beneish M-Score -0.53 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.

Kennedy-Wilson Holdings Inc has a M-score of -0.52 signals that the company is a manipulator.

KW' s 10-Year Beneish M-Score Range
Min: -2.87   Max: 6378.7
Current: -0.53

-2.87
6378.7

During the past 7 years, the highest Beneish M-Score of Kennedy-Wilson Holdings Inc was 6378.70. The lowest was -2.87. And the median was -1.86.


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 * 2.4026+0.528 * 1.0559+0.404 * 0.3139+0.892 * 2.0022+0.115 * 1.5132
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.7827+4.679 * -0.034-0.327 * 0.7519
=-0.52

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.

This Year (Mar14) TTM:Last Year (Mar13) TTM:
Accounts Receivable was $230.4 Mil.
Revenue was 51.5 + 29.64 + 33.208 + 35.955 = $150.3 Mil.
Gross Profit was 41.8 + 29.625 + 32.325 + 30.825 = $134.6 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.
Net Income was 12.5 + -2.339 + -2.033 + -0.432 = $7.7 Mil.
Non Operating Income was 81 + 41.583 + 1.668 + 11.41 = $135.7 Mil.
Cash Flow from Operations was -36.9 + 48.386 + 6.77 + 3.744 = $22.0 Mil.
Accounts Receivable was $47.9 Mil.
Revenue was 22.8 + 22.92 + 15.24 + 14.11 = $75.1 Mil.
Gross Profit was 20.9 + 21.995 + 13.965 + 14.11 = $71.0 Mil.
Total Current Assets was $256.3 Mil.
Total Assets was $1,386.1 Mil.
Property, Plant and Equipment(Net PPE) was $403.6 Mil.
Depreciation, Depletion and Amortization(DDA) was $7.1 Mil.
Selling, General & Admin. Expense(SGA) was $92.5 Mil.
Total Current Liabilities was $85.1 Mil.
Long-Term Debt was $660.6 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)
=(230.4 / 150.303) / (47.896 / 75.07)
=1.53290353 / 0.63801785
=2.4026

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)
=(29.625 / 75.07) / (41.8 / 150.303)
=0.94538431 / 0.89535804
=1.0559

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 - (1803.5 + 1878.9) / 4407.2) / (1 - (256.344 + 403.612) / 1386.101)
=0.16445816 / 0.52387597
=0.3139

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
=150.303 / 75.07
=2.0022

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))
=(7.063 / (7.063 + 403.612)) / (21.6 / (21.6 + 1878.9))
=0.01719851 / 0.01136543
=1.5132

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)
=(144.952 / 150.303) / (92.496 / 75.07)
=0.96439858 / 1.23213001
=0.7827

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)
=((1601.4 + 181.6) / 4407.2) / ((660.632 + 85.134) / 1386.101)
=0.40456526 / 0.5380315
=0.7519

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
=(7.696 - 135.661 - 22) / 4407.2
=-0.034

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 -0.52 signals that the company is likely to 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 own currency.

Kennedy-Wilson Holdings Inc Annual Data

Dec07Dec08Dec09Dec10Dec11Dec12Dec13
DSRI 1.45392.65090.2387
GMI 0.77681.0291.033
AQI 0.90540.90540.8944
SGI 1.23941.02341.8908
DEPI 0.80631.42940.6566
SGAI 0.8931.3120.7758
LVGI 1.33391.24580.9142
TATA -0.0082-0.0324-0.05
M-score -2.16-1.20-2.62

Kennedy-Wilson Holdings Inc Quarterly Data

Dec11Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14
DSRI 1.45391.57861.63521.36122.65090.6340.52730.39680.2382.4026
GMI 0.82560.81810.8160.83421.03551.05781.10531.06461.0331.0559
AQI 0.90540.86721.19271.04920.90540.87360.84540.89310.89440.3139
SGI 1.23941.35711.48921.50911.02341.1421.35861.55671.89712.0022
DEPI 0.80630.68560.50010.57441.42941.66651.57171.28420.65661.5132
SGAI 0.85770.84870.82290.8951.30381.23341.10381.02690.77290.7827
LVGI 1.33391.26570.97860.81571.24581.13270.71971.23810.91420.7519
TATA -0.018-0.0295-0.0608-0.0494-0.0406-0.0233-0.011-0.0179-0.0567-0.034
M-score -2.17-2.01-1.78-1.96-1.23-2.83-2.51-2.68-2.64-0.52
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