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Radian Group Inc (NYSE:RDN)
Beneish M-Score
-2.62 (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 -2.62 suggests that the company is not a manipulator.

RDN' s Beneish M-Score Range Over the Past 10 Years
Min: -2.62   Max: -2.12
Current: -2.62

-2.62
-2.12

During the past 13 years, the highest Beneish M-Score of Radian Group Inc was -2.12. The lowest was -2.62. And the median was -2.37.


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 * 0.6469+0.528 * 1+0.404 * 0.9957+0.892 * 1.1124+0.115 * 1.1134
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.4578+4.679 * 0.0484-0.327 * 1.2403
=-2.62

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

This Year (Dec15) TTM:Last Year (Dec14) TTM:
Accounts Receivable was $62 Mil.
Revenue was 274.882 + 297.292 + 330.416 + 290.663 = $1,193 Mil.
Gross Profit was 274.882 + 297.292 + 330.416 + 290.663 = $1,193 Mil.
Total Current Assets was $0 Mil.
Total Assets was $5,642 Mil.
Property, Plant and Equipment(Net PPE) was $47 Mil.
Depreciation, Depletion and Amortization(DDA) was $82 Mil.
Selling, General & Admin. Expense(SGA) was $71 Mil.
Total Current Liabilities was $0 Mil.
Long-Term Debt was $1,219 Mil.
Net Income was 74.528 + 70.091 + 50.048 + 92.257 = $287 Mil.
Non Operating Income was 0 + 0 + 0 + 0 = $0 Mil.
Cash Flow from Operations was 21.507 + 60.811 + -56.475 + -12.088 = $14 Mil.
Accounts Receivable was $86 Mil.
Revenue was 295.05 + 272.081 + 247.38 + 258.174 = $1,073 Mil.
Gross Profit was 295.05 + 272.081 + 247.38 + 258.174 = $1,073 Mil.
Total Current Assets was $0 Mil.
Total Assets was $6,842 Mil.
Property, Plant and Equipment(Net PPE) was $27 Mil.
Depreciation, Depletion and Amortization(DDA) was $66 Mil.
Selling, General & Admin. Expense(SGA) was $44 Mil.
Total Current Liabilities was $0 Mil.
Long-Term Debt was $1,192 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)
=(61.734 / 1193.253) / (85.792 / 1072.685)
=0.05173589 / 0.07997874
=0.6469

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)
=(297.292 / 1072.685) / (274.882 / 1193.253)
=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 + 46.802) / 5642.1) / (1 - (0 + 27.248) / 6842.336)
=0.99170486 / 0.99601773
=0.9957

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
=1193.253 / 1072.685
=1.1124

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))
=(65.949 / (65.949 + 27.248)) / (81.625 / (81.625 + 46.802))
=0.70763007 / 0.63557507
=1.1134

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)
=(70.71 / 1193.253) / (43.605 / 1072.685)
=0.05925818 / 0.04065033
=1.4578

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)
=((1219.454 + 0) / 5642.1) / ((1192.299 + 0) / 6842.336)
=0.21613477 / 0.17425321
=1.2403

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
=(286.924 - 0 - 13.755) / 5642.1
=0.0484

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 -2.62 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

Dec13Mar14Jun14Sep14Dec14Mar15Jun15Sep15Dec15Mar16
DSRI 0.60370.64690.9365
GMI 111
AQI 1.00370.99571
SGI 1.16661.11241.0999
DEPI 0.72051.11341
SGAI 2.44571.45781.9279
LVGI 0.98481.24031.2047
TATA 0.09760.04840.0394
M-score -2.51-2.62-2.49
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