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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.
International Game Technology has a M-score of -2.56 suggests that the company is not a manipulator.
During the past 13 years, the highest Beneish M-Score of International Game Technology was -2.01. The lowest was -3.40. And the median was -2.70.
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 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 * 0.9596||+||0.528 * 1.0041||+||0.404 * 1.0414||+||0.892 * 0.9204||+||0.115 * 1.0177|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.2091||+||4.679 * 0.0147||-||0.327 * 1.0905|
* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.
|This Year (Jun14) TTM:||Last Year (Jun13) TTM:|
|Accounts Receivable was $296 Mil.|
Revenue was 467.6 + 512.8 + 541.2 + 632.4 = $2,154 Mil.
Gross Profit was 284.9 + 292.8 + 309.8 + 356.7 = $1,244 Mil.
Total Current Assets was $1,213 Mil.
Total Assets was $4,057 Mil.
Property, Plant and Equipment(Net PPE) was $436 Mil.
Depreciation, Depletion and Amortization(DDA) was $201 Mil.
Selling, General & Admin. Expense(SGA) was $481 Mil.
Total Current Liabilities was $522 Mil.
Long-Term Debt was $1,988 Mil.
Net Income was 72.1 + 25.7 + 79.2 + 63.5 = $241 Mil.
Non Operating Income was 0.7 + -3.4 + -1.9 + -3.2 = $-8 Mil.
Cash Flow from Operations was 126.6 + -141.3 + 76.1 + 127.4 = $189 Mil.
|Accounts Receivable was $335 Mil.
Revenue was 579 + 600 + 530.3 + 631.1 = $2,340 Mil.
Gross Profit was 337.2 + 341.3 + 309.5 + 369.4 = $1,357 Mil.
Total Current Assets was $1,269 Mil.
Total Assets was $4,114 Mil.
Property, Plant and Equipment(Net PPE) was $499 Mil.
Depreciation, Depletion and Amortization(DDA) was $237 Mil.
Selling, General & Admin. Expense(SGA) was $432 Mil.
Total Current Liabilities was $1,465 Mil.
Long-Term Debt was $868 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)|
|=||(295.5 / 2154)||/||(334.6 / 2340.4)|
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)|
|=||(292.8 / 2340.4)||/||(284.9 / 2154)|
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 - (1212.6 + 435.6) / 4057.4)||/||(1 - (1269.3 + 499.2) / 4114.4)|
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))|
|=||(236.6 / (236.6 + 499.2))||/||(201.2 / (201.2 + 435.6))|
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)|
|=||(480.6 / 2154)||/||(431.9 / 2340.4)|
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)|
|=||((1987.7 + 521.5) / 4057.4)||/||((867.9 + 1465.4) / 4114.4)|
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|
|=||(240.5 - -7.8||-||188.8)||/||4057.4|
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 has a M-score of -2.56 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 Annual Data
International Game Technology Quarterly Data