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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 3.14. The lowest was -3.47. And the median was -0.84.
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 * 0.6499||+||0.528 * 0.9519||+||0.404 * 0.7829||+||0.892 * 1.5138||+||0.115 * 0.8646|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9599||+||4.679 * -0.0318||-||0.327 * 1.2035|
|This Year (Dec15) TTM:||Last Year (Dec14) TTM:|
|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 $786.3 Mil.
Total Assets was $7,640.1 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 $4,360.8 Mil.
Net Income was 29 + 15.4 + 31.8 + -1.5 = $74.7 Mil.
Non Operating Income was 36.8 + 22 + 88.4 + -7.5 = $139.7 Mil.
Cash Flow from Operations was 64 + 76.9 + 53.9 + -16.6 = $178.2 Mil.
|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.
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)|
|=||(54.7 / 603.7)||/||(55.6 / 398.8)|
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)|
|=||(158.1 / 398.8)||/||(166.3 / 603.7)|
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 - (786.3 + 5825.4) / 7640.1)||/||(1 - (993.3 + 4250.1) / 6332.1)|
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))|
|=||(104.5 / (104.5 + 4250.1))||/||(166.3 / (166.3 + 5825.4))|
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)|
|=||(403.8 / 603.7)||/||(277.9 / 398.8)|
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)|
|=||((4360.8 + 414.2) / 7640.1)||/||((3023.3 + 264.9) / 6332.1)|
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|
|=||(74.7 - 139.7||-||178.2)||/||7640.1|
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 -2.68 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