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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 -2.03. The lowest was -3.15. 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 * 0.7304||+||0.528 * 0.9345||+||0.404 * 1.0211||+||0.892 * 1.2329||+||0.115 * 0.7255|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0488||+||4.679 * -0.0571||-||0.327 * 1.0291|
|This Year (Sep16) TTM:||Last Year (Sep15) TTM:|
|Accounts Receivable was $916 Mil.|
Revenue was 1265.65 + 1285.469 + 1281.561 + 1364.957 = $5,198 Mil.
Gross Profit was 503.713 + 502.997 + 511.022 + 510.634 = $2,028 Mil.
Total Current Assets was $2,181 Mil.
Total Assets was $15,295 Mil.
Property, Plant and Equipment(Net PPE) was $1,522 Mil.
Depreciation, Depletion and Amortization(DDA) was $904 Mil.
Selling, General & Admin. Expense(SGA) was $958 Mil.
Total Current Liabilities was $2,326 Mil.
Long-Term Debt was $8,287 Mil.
Net Income was -1.903 + 72.696 + -92.774 + 73.501 = $52 Mil.
Non Operating Income was -18.236 + 87.577 + -168.882 + 89.031 = $-11 Mil.
Cash Flow from Operations was 97.19 + 318.202 + 205.605 + 315.003 = $936 Mil.
|Accounts Receivable was $1,018 Mil.
Revenue was 1201.573 + 1274.284 + 848.242 + 891.805 = $4,216 Mil.
Gross Profit was 453.963 + 480.392 + 306.409 + 296.745 = $1,538 Mil.
Total Current Assets was $2,604 Mil.
Total Assets was $15,818 Mil.
Property, Plant and Equipment(Net PPE) was $1,473 Mil.
Depreciation, Depletion and Amortization(DDA) was $546 Mil.
Selling, General & Admin. Expense(SGA) was $741 Mil.
Total Current Liabilities was $1,917 Mil.
Long-Term Debt was $8,748 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)|
|=||(916.315 / 5197.637)||/||(1017.554 / 4215.904)|
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)|
|=||(1537.509 / 4215.904)||/||(2028.366 / 5197.637)|
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 - (2180.635 + 1522.344) / 15295.15)||/||(1 - (2604.173 + 1473.369) / 15818.375)|
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))|
|=||(545.94 / (545.94 + 1473.369))||/||(904.335 / (904.335 + 1522.344))|
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)|
|=||(957.536 / 5197.637)||/||(740.538 / 4215.904)|
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)|
|=||((8286.69 + 2325.813) / 15295.15)||/||((8747.737 + 1917.447) / 15818.375)|
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|
|=||(51.52 - -10.51||-||936)||/||15295.15|
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 -2.86 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