GURUFOCUS.COM » STOCK LIST » Financial Services » Insurance » Radian Group Inc (NYSE:RDN) » Definitions » Beneish M-Score

RDN (Radian Group) Beneish M-Score : -2.25 (As of Oct. 31, 2024)


View and export this data going back to 1992. Start your Free Trial

What is Radian Group Beneish M-Score?

Note: Financial institutions were excluded from the sample in Beneish paper when calculating Beneish M-Score. Thus, the prediction might not fit banks and insurance companies.

The zones of discrimination for M-Score is as such:

An M-Score of equal or less than -1.78 suggests that the company is unlikely to be a manipulator.
An M-Score of greater than -1.78 signals that the company is likely to be a manipulator.

Good Sign:

Beneish M-Score -2.25 no higher than -1.78, which implies that the company is unlikely to be a manipulator.

The historical rank and industry rank for Radian Group's Beneish M-Score or its related term are showing as below:

RDN' s Beneish M-Score Range Over the Past 10 Years
Min: -3.03   Med: -2.32   Max: -1.06
Current: -2.25

During the past 13 years, the highest Beneish M-Score of Radian Group was -1.06. The lowest was -3.03. And the median was -2.32.


Radian Group Beneish M-Score Calculation

The M-score was created by Professor Messod Beneish. Instead of measuring the bankruptcy risk (Altman Z-Score) or business trend (Piotroski 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 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 * 0.989+0.528 * 1+0.404 * 1.004+0.892 * 1.0576+0.115 * 1.4593
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1+4.679 * 0.050929-0.327 * 1.3056
=-2.25

* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD.
* For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.

This Year (Jun24) TTM:Last Year (Jun23) TTM:
Total Receivables was $169 Mil.
Revenue was 321.147 + 319.418 + 326.022 + 313.533 = $1,280 Mil.
Gross Profit was 321.147 + 319.418 + 326.022 + 313.533 = $1,280 Mil.
Total Current Assets was $0 Mil.
Total Assets was $8,130 Mil.
Property, Plant and Equipment(Net PPE) was $70 Mil.
Depreciation, Depletion and Amortization(DDA) was $3 Mil.
Selling, General, & Admin. Expense(SGA) was $96 Mil.
Total Current Liabilities was $0 Mil.
Long-Term Debt & Capital Lease Obligation was $1,509 Mil.
Net Income was 151.903 + 152.354 + 142.693 + 156.582 = $604 Mil.
Non Operating Income was 0.872 + 1.262 + 1.305 + 2.109 = $6 Mil.
Cash Flow from Operations was -207.282 + 51.044 + 264.958 + 75.227 = $184 Mil.
Total Receivables was $161 Mil.
Revenue was 289.579 + 309.852 + 314.724 + 296.189 = $1,210 Mil.
Gross Profit was 289.579 + 309.852 + 314.724 + 296.189 = $1,210 Mil.
Total Current Assets was $0 Mil.
Total Assets was $7,307 Mil.
Property, Plant and Equipment(Net PPE) was $92 Mil.
Depreciation, Depletion and Amortization(DDA) was $5 Mil.
Selling, General, & Admin. Expense(SGA) was $0 Mil.
Total Current Liabilities was $0 Mil.
Long-Term Debt & Capital Lease Obligation was $1,039 Mil.




1. DSRI = Days Sales in Receivables Index

Measured as the ratio of Revenue in Total 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)
=(168.841 / 1280.12) / (161.411 / 1210.344)
=0.131895 / 0.13336
=0.989

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)
=(1210.344 / 1210.344) / (1280.12 / 1280.12)
=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 Property, Plant 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 + 70.385) / 8129.643) / (1 - (0 + 92.443) / 7306.541)
=0.991342 / 0.987348
=1.004

4. SGI = Sales Growth Index

Ratio of Revenue 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
=1280.12 / 1210.344
=1.0576

5. DEPI = Depreciation Index

Measured as the ratio of the rate of Depreciation, Depletion and Amortization 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))
=(5.351 / (5.351 + 92.443)) / (2.742 / (2.742 + 70.385))
=0.054717 / 0.037496
=1.4593

Note: If the Depreciation, Depletion and Amortization data is not available, we assume that the depreciation rate is constant and set the Depreciation Index to 1.

6. SGAI = Sales, General and Administrative expenses Index

The ratio of Selling, General, & Admin. Expense(SGA) to Sales 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)
=(96.277 / 1280.12) / (0 / 1210.344)
=0.075209 / 0
=1

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 in leverage

LVGI=((LTD_t + CurrentLiabilities_t) / TotalAssets_t) / ((LTD_t-1 + CurrentLiabilities_t-1) / TotalAssets_t-1)
=((1508.647 + 0) / 8129.643) / ((1038.551 + 0) / 7306.541)
=0.185574 / 0.14214
=1.3056

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
=(603.532 - 5.548 - 183.947) / 8129.643
=0.050929

An M-Score of equal or less than -1.78 suggests that the company is unlikely to be a manipulator. An M-Score of greater than -1.78 signals that the company is likely to be a manipulator.

Radian Group has a M-score of -2.25 suggests that the company is unlikely to be a manipulator.


Radian Group Beneish M-Score Related Terms

Thank you for viewing the detailed overview of Radian Group's Beneish M-Score provided by GuruFocus.com. Please click on the following links to see related term pages.


Radian Group Business Description

Traded in Other Exchanges
N/A
Address
550 East Swedesford Road, Suite 350, Wayne, PA, USA, 19087
Radian Group Inc provides mortgage insurance and services to the real estate and mortgage finance industries. Radian's mortgage insurance provides coverage to lending institutions throughout the United States. Its services include analytics and consulting for buyers and sellers of, and investors in, mortgage- and real estate-related loans and securities and other asset-backed securities. Insurance premiums account for more than three fourths of the company's revenue. Services revenue and investment income are the other principal sources of revenue. It operates in two segments: Mortgage and homegenius. The Mortgage segment earns the majority of revenue.
Executives
Derek Brummer officer: Chief Risk Officer RADIAN GROUP INC., 1601 MARKET ST, PHILADELPHIA PA 19103
Mary Dickerson officer: EVP Chief People Officer RADIAN GROUP INC., 1500 MARKET ST., #2050W, PHILADELPHIA PA 19102
Robert Quigley officer: Sr. Vice President, Controller C/O RADIAN,, 1500 MARKET ST., #2050W, PHILADELPHIA PA 19102
Eric Ray officer: Sr, Executive Vice President C/O RADIAN, 1500 MARKET ST., #2050W, PHILADELPHIA PA 19102
Edward J Hoffman officer: SVP, Secretary and General Cou 1601 MARKET STREET, PHILADELPHIA PA 19103
Sumita Pandit officer: Sr. EVP, Chief Growth Officer 550 EAST SWEDESFORD RD., #350, WAYNE PA 19087
Noel Joseph Spiegel director RADIAN GROUP INC., 1601 MARKET STREET, PHILADELPHIA PA 19103
Brien Mcmahon officer: EVP & Chief Franchise Officer 1500 MARKET ST., WEST TOWER, #2050, PHILADELPHIA PA 19102
Lisa Mumford director 6 BEACHWOOD COURT, DIX HILLS NY 11746
Gregory Serio director RADIAN GROUP INC., 1601 MARKET ST., PHILADELPHIA PA 19103
Howard Bernard Culang director 9 MARISSA COURT, ATLANTIC HIGHLANDS NJ 07716
Lisa Hess director RADIAN GROUP, 1601 MARKET ST, PHILADELPHIA PA 19103
Margaret Anne Leyden director 550 E. SWEDESFORD RD.,, STE 350, WAYNE PA 19087
Fawad Ahmad director C/) RADIAN GROUP INC., 550 E. SWEDESFORD RD., #350, WAYNE PA 19087
Richard G Thornberry director, officer: Chief Executive Officer RADIAN, 1601 MARKET ST, PHILADELPHIA PA 19103