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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 International Game Technology PLC was -1.98. The lowest was -3.27. And the median was -2.71.
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 International Game Technology PLC 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 * 0.8483||+||0.528 * 0.8829||+||0.404 * 1.125||+||0.892 * 1.4085||+||0.115 * 0.6324|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.5314||+||4.679 * -0.0604||-||0.327 * 1.0897|
|This Year (Mar16) TTM:||Last Year (Mar15) TTM:|
|Accounts Receivable was $1,012 Mil.|
Revenue was 1281.561 + 1316.39 + 1215.313 + 1290.08 = $5,103 Mil.
Gross Profit was 511.022 + 510.635 + 453.962 + 480.181 = $1,956 Mil.
Total Current Assets was $2,400 Mil.
Total Assets was $14,930 Mil.
Property, Plant and Equipment(Net PPE) was $1,469 Mil.
Depreciation, Depletion and Amortization(DDA) was $224 Mil.
Selling, General & Admin. Expense(SGA) was $978 Mil.
Total Current Liabilities was $2,087 Mil.
Long-Term Debt was $8,228 Mil.
Net Income was -92.774 + 82.356 + 7.133 + -116.89 = $-120 Mil.
Non Operating Income was -168.882 + 104.862 + 9.34 + -101.324 = $-156 Mil.
Cash Flow from Operations was 205.605 + 315.003 + 253.909 + 163.302 = $938 Mil.
|Accounts Receivable was $847 Mil.
Revenue was 848.242 + 891.805 + 937.917 + 945.318 = $3,623 Mil.
Gross Profit was 306.409 + 296.745 + 318.787 + 304.075 = $1,226 Mil.
Total Current Assets was $1,676 Mil.
Total Assets was $8,283 Mil.
Property, Plant and Equipment(Net PPE) was $1,152 Mil.
Depreciation, Depletion and Amortization(DDA) was $105 Mil.
Selling, General & Admin. Expense(SGA) was $454 Mil.
Total Current Liabilities was $2,100 Mil.
Long-Term Debt was $3,152 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)|
|=||(1011.687 / 5103.344)||/||(846.728 / 3623.282)|
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)|
|=||(1226.016 / 3623.282)||/||(1955.8 / 5103.344)|
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 - (2400.405 + 1468.509) / 14930.485)||/||(1 - (1676.491 + 1151.901) / 8283.293)|
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))|
|=||(105.225 / (105.225 + 1151.901))||/||(224.014 / (224.014 + 1468.509))|
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)|
|=||(978.468 / 5103.344)||/||(453.644 / 3623.282)|
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)|
|=||((8227.845 + 2087.309) / 14930.485)||/||((3151.548 + 2100.31) / 8283.293)|
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|
|=||(-120.175 - -156.004||-||937.819)||/||14930.485|
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.
International Game Technology PLC has a M-score of -2.71 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
International Game Technology PLC Annual Data
International Game Technology PLC Quarterly Data