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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 -2.71. The lowest was -3.47. And the median was -3.09.
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 * 1||+||0.528 * 0.7562||+||0.404 * 1.1668||+||0.892 * 1.0232||+||0.115 * 2.5408|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.7234||+||4.679 * -0.0779||-||0.327 * 1.159|
|This Year (Sep15) TTM:||Last Year (Sep14) TTM:|
|Accounts Receivable was $0 Mil.|
Revenue was 1215.313 + 1290.08 + 874.662 + 812.23 = $4,192 Mil.
Gross Profit was 453.962 + 480.181 + 487.005 + 970.704 = $2,392 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 $130 Mil.
Selling, General & Admin. Expense(SGA) was $151 Mil.
Total Current Liabilities was $1,917 Mil.
Long-Term Debt was $8,748 Mil.
Net Income was 7.133 + -116.89 + -29.163 + -135.472 = $-274 Mil.
Non Operating Income was 0 + 0 + 0 + 0 = $0 Mil.
Cash Flow from Operations was 253.909 + 46.305 + 170.78 + 487.481 = $958 Mil.
|Accounts Receivable was $0 Mil.
Revenue was 937.917 + 945.318 + 1074.478 + 1139.642 = $4,097 Mil.
Gross Profit was 318.787 + 304.075 + 586.856 + 558.068 = $1,768 Mil.
Total Current Assets was $2,132 Mil.
Total Assets was $9,267 Mil.
Property, Plant and Equipment(Net PPE) was $1,240 Mil.
Depreciation, Depletion and Amortization(DDA) was $321 Mil.
Selling, General & Admin. Expense(SGA) was $204 Mil.
Total Current Liabilities was $2,016 Mil.
Long-Term Debt was $3,375 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)|
|=||(0 / 4192.285)||/||(0 / 4097.355)|
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)|
|=||(480.181 / 4097.355)||/||(453.962 / 4192.285)|
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 - (2604.173 + 1473.369) / 15818.375)||/||(1 - (2132.429 + 1239.68) / 9267.38)|
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))|
|=||(321.416 / (321.416 + 1239.68))||/||(129.921 / (129.921 + 1473.369))|
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)|
|=||(151.325 / 4192.285)||/||(204.454 / 4097.355)|
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)|
|=||((8747.737 + 1917.447) / 15818.375)||/||((3375.032 + 2015.877) / 9267.38)|
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|
|=||(-274.392 - 0||-||958.475)||/||15818.375|
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