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GuruFocus has detected 8 Warning Signs with Kennedy-Wilson Holdings Inc $KW.
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Kennedy-Wilson Holdings Inc (NYSE:KW)
Beneish M-Score
-2.46 (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.

Kennedy-Wilson Holdings Inc has a M-score of -2.46 suggests that the company is not a manipulator.

KW' s Beneish M-Score Range Over the Past 10 Years
Min: -4.01   Max: 2453.21
Current: -2.46

-4.01
2453.21

During the past 10 years, the highest Beneish M-Score of Kennedy-Wilson Holdings Inc was 2453.21. The lowest was -4.01. And the median was -1.96.


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 * 1.0622+0.528 * 1.0272+0.404 * 1.0523+0.892 * 1.1055+0.115 * 0.8957
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9672+4.679 * -0.0292-0.327 * 1.0856
=-2.46

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

This Year (Mar17) TTM:Last Year (Mar16) TTM:
Accounts Receivable was $80.2 Mil.
Revenue was 174.2 + 180.4 + 174.3 + 176.5 = $705.4 Mil.
Gross Profit was 173.5 + 171.4 + 171.8 + 167.3 = $684.0 Mil.
Total Current Assets was $888.5 Mil.
Total Assets was $7,626.0 Mil.
Property, Plant and Equipment(Net PPE) was $5,855.6 Mil.
Depreciation, Depletion and Amortization(DDA) was $199.6 Mil.
Selling, General & Admin. Expense(SGA) was $463.6 Mil.
Total Current Liabilities was $392.5 Mil.
Long-Term Debt was $4,896.3 Mil.
Net Income was 0.8 + 15.6 + -2 + -1.1 = $13.3 Mil.
Non Operating Income was 5.6 + 53.6 + 30 + 23.4 = $112.6 Mil.
Cash Flow from Operations was 11.2 + 24.5 + 67.9 + 19.4 = $123.0 Mil.
Accounts Receivable was $68.3 Mil.
Revenue was 172.1 + 166.3 + 159.2 + 140.5 = $638.1 Mil.
Gross Profit was 170.7 + 166.3 + 158.1 + 140.5 = $635.6 Mil.
Total Current Assets was $966.4 Mil.
Total Assets was $7,658.4 Mil.
Property, Plant and Equipment(Net PPE) was $5,850.4 Mil.
Depreciation, Depletion and Amortization(DDA) was $178.0 Mil.
Selling, General & Admin. Expense(SGA) was $433.6 Mil.
Total Current Liabilities was $423.9 Mil.
Long-Term Debt was $4,468.6 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)
=(80.2 / 705.4) / (68.3 / 638.1)
=0.11369436 / 0.10703651
=1.0622

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)
=(635.6 / 638.1) / (684 / 705.4)
=0.99608212 / 0.9696626
=1.0272

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 - (888.5 + 5855.6) / 7626) / (1 - (966.4 + 5850.4) / 7658.4)
=0.11564385 / 0.10989241
=1.0523

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
=705.4 / 638.1
=1.1055

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))
=(178 / (178 + 5850.4)) / (199.6 / (199.6 + 5855.6))
=0.02952691 / 0.0329634
=0.8957

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)
=(463.6 / 705.4) / (433.6 / 638.1)
=0.65721576 / 0.67951732
=0.9672

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)
=((4896.3 + 392.5) / 7626) / ((4468.6 + 423.9) / 7658.4)
=0.69352216 / 0.63884101
=1.0856

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
=(13.3 - 112.6 - 123) / 7626
=-0.0292

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 -2.46 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 local exchange's currency.

Kennedy-Wilson Holdings Inc Annual Data

Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15Dec16
DSRI 4.03427.2090.17992.5081.0330.64991.1189
GMI 0.62230.82571.0341.03350.98730.95191.028
AQI 1.0240.90540.90540.9220.34160.52391.123
SGI 0.5861.23871.06871.83863.24231.51381.165
DEPI 00.81331.4170.6851.01280.86460.8455
SGAI 1.95960.85871.24770.79780.69230.95991.0025
LVGI 0.76841.33391.24580.91420.95331.19931.1145
TATA -0.0475-0.0141-0.0428-0.0504-0.0398-0.032-0.0315
M-score -0.673.14-3.47-0.57-0.84-2.79-2.36

Kennedy-Wilson Holdings Inc Quarterly Data

Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16Dec16Mar17
DSRI 1.0330.6330.67890.82810.64991.51790.97360.95821.11891.0622
GMI 0.98730.92040.94550.96330.95190.97791.00111.00411.0281.0272
AQI 0.34161.0710.85150.86420.52390.62390.7930.7691.1231.0523
SGI 3.24233.19712.57362.01391.51381.31571.26351.19031.1651.1055
DEPI 1.01280.41710.41470.66530.86460.92290.91890.90870.84550.8957
SGAI 0.69230.68470.80910.8610.95991.03830.96271.00131.00250.9672
LVGI 0.95331.33841.22411.1371.19931.17981.13931.13981.11451.0856
TATA -0.0398-0.0297-0.0224-0.0282-0.032-0.0393-0.0304-0.0315-0.0315-0.0292
M-score -0.84-1.13-1.67-2.00-2.79-2.14-2.54-2.64-2.36-2.46
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