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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 13 years, the highest Beneish M-Score of IDEX Corp was -2.27. The lowest was -3.00. And the median was -2.59.
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 IDEX Corp 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 * 1.0035||+||0.528 * 1.016||+||0.404 * 1.0891||+||0.892 * 1.0457||+||0.115 * 0.9431|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9954||+||4.679 * -0.0435||-||0.327 * 1.0239|
|This Year (Dec16) TTM:||Last Year (Dec15) TTM:|
|Accounts Receivable was $275 Mil.|
Revenue was 530.419 + 530.356 + 549.696 + 502.572 = $2,113 Mil.
Gross Profit was 232.485 + 230.889 + 244.058 + 223.335 = $931 Mil.
Total Current Assets was $823 Mil.
Total Assets was $3,155 Mil.
Property, Plant and Equipment(Net PPE) was $248 Mil.
Depreciation, Depletion and Amortization(DDA) was $87 Mil.
Selling, General & Admin. Expense(SGA) was $499 Mil.
Total Current Liabilities was $309 Mil.
Long-Term Debt was $1,014 Mil.
Net Income was 57.347 + 69.873 + 75.759 + 68.13 = $271 Mil.
Non Operating Income was 3.345 + 2.364 + 1.874 + 0.744 = $8 Mil.
Cash Flow from Operations was 115.593 + 125.481 + 88.478 + 70.365 = $400 Mil.
|Accounts Receivable was $262 Mil.
Revenue was 499.798 + 503.791 + 514.881 + 502.198 = $2,021 Mil.
Gross Profit was 223.399 + 223.26 + 231.615 + 226.041 = $904 Mil.
Total Current Assets was $863 Mil.
Total Assets was $2,805 Mil.
Property, Plant and Equipment(Net PPE) was $241 Mil.
Depreciation, Depletion and Amortization(DDA) was $78 Mil.
Selling, General & Admin. Expense(SGA) was $479 Mil.
Total Current Liabilities was $310 Mil.
Long-Term Debt was $840 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)|
|=||(275.25 / 2113.043)||/||(262.304 / 2020.668)|
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)|
|=||(904.315 / 2020.668)||/||(930.767 / 2113.043)|
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 - (822.721 + 247.816) / 3154.944)||/||(1 - (862.684 + 240.945) / 2805.443)|
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))|
|=||(78.12 / (78.12 + 240.945))||/||(86.892 / (86.892 + 247.816))|
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)|
|=||(498.994 / 2113.043)||/||(479.408 / 2020.668)|
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)|
|=||((1014.235 + 309.158) / 3154.944)||/||((839.707 + 309.597) / 2805.443)|
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|
|=||(271.109 - 8.327||-||399.917)||/||3154.944|
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.
IDEX Corp has a M-score of -2.61 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
IDEX Corp Annual Data
IDEX Corp Quarterly Data