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Kennedy-Wilson Holdings Inc (NYSE:KW)
Beneish M-Score
-1.10 (As of Today)

Warning Sign:

Beneish M-Score -1.10 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 -1.10 signals that the company is a manipulator.

KW' s 10-Year Beneish M-Score Range
Min: -3.95   Max: 1628.83
Current: -1.1

-3.95
1628.83

During the past 7 years, the highest Beneish M-Score of Kennedy-Wilson Holdings Inc was 1628.83. The lowest was -3.95. And the median was -2.06.


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 * 1.9489+0.528 * 0.9739+0.404 * 0.3802+0.892 * 2.1194+0.115 * 1.7783
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.7761+4.679 * -0.052-0.327 * 1.3319
=-1.10

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

This Year (Jun14) TTM:Last Year (Jun13) TTM:
Accounts Receivable was $30.5 Mil.
Revenue was 92 + 51.5 + 29.64 + 33.208 = $206.3 Mil.
Gross Profit was 88.1 + 41.8 + 29.625 + 32.325 = $191.9 Mil.
Total Current Assets was $679.1 Mil.
Total Assets was $5,354.7 Mil.
Property, Plant and Equipment(Net PPE) was $3,553.4 Mil.
Depreciation, Depletion and Amortization(DDA) was $42.5 Mil.
Selling, General & Admin. Expense(SGA) was $173.8 Mil.
Total Current Liabilities was $316.2 Mil.
Long-Term Debt was $2,244.2 Mil.
Net Income was 38.4 + 12.5 + -2.339 + -2.033 = $46.5 Mil.
Non Operating Income was 80.5 + 81 + 41.583 + 1.668 = $204.8 Mil.
Cash Flow from Operations was 102 + -36.9 + 48.386 + 6.814 = $120.3 Mil.
Accounts Receivable was $7.4 Mil.
Revenue was 36.4 + 22.8 + 22.92 + 15.24 = $97.4 Mil.
Gross Profit was 31.3 + 20.9 + 21.995 + 13.965 = $88.2 Mil.
Total Current Assets was $190.6 Mil.
Total Assets was $1,513.2 Mil.
Property, Plant and Equipment(Net PPE) was $488.4 Mil.
Depreciation, Depletion and Amortization(DDA) was $10.5 Mil.
Selling, General & Admin. Expense(SGA) was $105.7 Mil.
Total Current Liabilities was $103.9 Mil.
Long-Term Debt was $439.3 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)
=(30.5 / 206.348) / (7.384 / 97.36)
=0.14780856 / 0.07584224
=1.9489

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)
=(41.8 / 97.36) / (88.1 / 206.348)
=0.90550534 / 0.92974005
=0.9739

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 - (679.1 + 3553.4) / 5354.7) / (1 - (190.597 + 488.435) / 1513.247)
=0.2095729 / 0.55127484
=0.3802

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
=206.348 / 97.36
=2.1194

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))
=(10.486 / (10.486 + 488.435)) / (42.5 / (42.5 + 3553.4))
=0.02101736 / 0.01181902
=1.7783

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)
=(173.783 / 206.348) / (105.653 / 97.36)
=0.84218408 / 1.08517872
=0.7761

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)
=((2244.2 + 316.2) / 5354.7) / ((439.348 + 103.908) / 1513.247)
=0.47815937 / 0.35900022
=1.3319

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
=(46.528 - 204.751 - 120.3) / 5354.7
=-0.052

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 -1.10 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 7.20520.18780.7639
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 3.13-3.47-2.13

Kennedy-Wilson Holdings Inc Quarterly Data

Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14
DSRI 1.71621.40971.14730.18780.97820.27621.14630.75860.32651.9489
GMI 0.81810.8160.83421.03551.05781.10441.0641.03251.05530.9739
AQI 0.86721.19271.04920.90540.87360.84540.89310.89440.31390.3802
SGI 1.35711.48921.50911.02341.1421.36481.56271.9042.00812.1194
DEPI 0.68560.50010.57441.42941.66651.56761.28420.65661.51321.7783
SGAI 0.84870.82290.8951.30381.23341.09911.02320.77030.78060.7761
LVGI 1.26570.97860.81571.24581.13270.71971.23810.91420.75191.3319
TATA -0.0295-0.0608-0.0494-0.0406-0.0233-0.0032-0.0107-0.0502-0.0313-0.052
M-score -1.89-1.99-2.16-3.50-2.51-2.70-1.95-2.13-2.42-1.10
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