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Radian Group Inc (NYSE:RDN)
Beneish M-Score
-2.37 (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.

Radian Group Inc has a M-score of -2.37 suggests that the company is not a manipulator.

RDN' s Beneish M-Score Range Over the Past 10 Years
Min: -2.63   Max: -2.12
Current: -2.37

-2.63
-2.12

During the past 13 years, the highest Beneish M-Score of Radian Group Inc was -2.12. The lowest was -2.63. And the median was -2.25.


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 Radian Group 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 * 1.0466+0.528 * 1+0.404 * 1+0.892 * 1.0228+0.115 * 1
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0617+4.679 * 0.0119-0.327 * 0.9865
=-2.37

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

This Year (Jun16) TTM:Last Year (Jun15) TTM:
Accounts Receivable was $77 Mil.
Revenue was 330.168 + 312.952 + 274.882 + 297.292 = $1,215 Mil.
Gross Profit was 330.168 + 312.952 + 274.882 + 297.292 = $1,215 Mil.
Total Current Assets was $0 Mil.
Total Assets was $6,067 Mil.
Property, Plant and Equipment(Net PPE) was $0 Mil.
Depreciation, Depletion and Amortization(DDA) was $13 Mil.
Selling, General & Admin. Expense(SGA) was $94 Mil.
Total Current Liabilities was $0 Mil.
Long-Term Debt was $1,278 Mil.
Net Income was 98.112 + 66.249 + 74.528 + 70.091 = $309 Mil.
Non Operating Income was 0 + 0 + 0 + 0 = $0 Mil.
Cash Flow from Operations was 112.629 + 41.869 + 21.507 + 60.811 = $237 Mil.
Accounts Receivable was $72 Mil.
Revenue was 330.416 + 290.663 + 295.05 + 272.081 = $1,188 Mil.
Gross Profit was 330.416 + 290.663 + 295.05 + 272.081 = $1,188 Mil.
Total Current Assets was $0 Mil.
Total Assets was $5,737 Mil.
Property, Plant and Equipment(Net PPE) was $0 Mil.
Depreciation, Depletion and Amortization(DDA) was $43 Mil.
Selling, General & Admin. Expense(SGA) was $86 Mil.
Total Current Liabilities was $0 Mil.
Long-Term Debt was $1,225 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)
=(77.17 / 1215.294) / (72.093 / 1188.21)
=0.06349904 / 0.06067362
=1.0466

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)
=(1188.21 / 1188.21) / (1215.294 / 1215.294)
=1 / 1
=1

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 - (0 + 0) / 6067.263) / (1 - (0 + 0) / 5736.504)
=1 / 1
=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.

SGI=Sales_t / Sales_t-1
=Revenue_t / Revenue_t-1
=1215.294 / 1188.21
=1.0228

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))
=(43.451 / (43.451 + 0)) / (13.321 / (13.321 + 0))
=1 / 1
=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)
=(93.797 / 1215.294) / (86.378 / 1188.21)
=0.0771805 / 0.0726959
=1.0617

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)
=((1278.051 + 0) / 6067.263) / ((1224.892 + 0) / 5736.504)
=0.21064704 / 0.21352587
=0.9865

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
=(308.98 - 0 - 236.816) / 6067.263
=0.0119

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.

Radian Group Inc has a M-score of -2.37 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 own currency.

Radian Group Inc Annual Data

Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15
DSRI 0.6469
GMI 1
AQI 0.9957
SGI 1.1124
DEPI 1.1134
SGAI 1.8547
LVGI 1.2403
TATA 0.0484
M-score -2.69

Radian Group Inc Quarterly Data

Mar14Jun14Sep14Dec14Mar15Jun15Sep15Dec15Mar16Jun16
DSRI 0.60370.64690.93651.0466
GMI 1111
AQI 1.00370.995711
SGI 1.16661.11241.09991.0228
DEPI 0.72053.25811
SGAI 3.13631.85471.33741.0617
LVGI 0.98481.24031.20470.9865
TATA 0.09760.04840.03420.0119
M-score -2.63-2.45-2.41-2.37
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