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International Game Technology (NYSE:IGT)
Beneish M-Score
-2.00 (As of Today)

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 -2.00 signals that the company is a manipulator.

IGT' s 10-Year Beneish M-Score Range
Min: -3.4   Max: -2
Current: -2

-3.4
-2

During the past 13 years, the highest Beneish M-Score of International Game Technology was -2.00. The lowest was -3.40. And the median was -2.66.


Definition

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 * 1.6411+0.528 * 0.967+0.404 * 1.1459+0.892 * 0.8363+0.115 * 1.0739
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.118+4.679 * -0.0043-0.327 * 0.9099
=-2.00

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.

This Year (Dec14) TTM:Last Year (Dec13) TTM:
Accounts Receivable was $464 Mil.
Revenue was 450.6 + 536.5 + 467.6 + 512.8 = $1,968 Mil.
Gross Profit was 258.4 + 327.1 + 284.9 + 292.8 = $1,163 Mil.
Total Current Assets was $1,093 Mil.
Total Assets was $3,809 Mil.
Property, Plant and Equipment(Net PPE) was $405 Mil.
Depreciation, Depletion and Amortization(DDA) was $176 Mil.
Selling, General & Admin. Expense(SGA) was $447 Mil.
Total Current Liabilities was $435 Mil.
Long-Term Debt was $1,810 Mil.
Net Income was 35 + 70.9 + 72.1 + 25.7 = $204 Mil.
Non Operating Income was 0.2 + -3.4 + 0.7 + -3.4 = $-6 Mil.
Cash Flow from Operations was 102.9 + 137.8 + 126.6 + -141.3 = $226 Mil.
Accounts Receivable was $338 Mil.
Revenue was 541.2 + 632.4 + 579 + 600 = $2,353 Mil.
Gross Profit was 309.8 + 356.7 + 337.2 + 341.3 = $1,345 Mil.
Total Current Assets was $1,578 Mil.
Total Assets was $4,348 Mil.
Property, Plant and Equipment(Net PPE) was $467 Mil.
Depreciation, Depletion and Amortization(DDA) was $225 Mil.
Selling, General & Admin. Expense(SGA) was $478 Mil.
Total Current Liabilities was $1,460 Mil.
Long-Term Debt was $1,356 Mil.



1. DSRI = Days Sales in Receivables Index

Measured as the ratio of days’ sales in receivables in year t to year t-1.

A large increase in DSR could be indicative of revenue inflation.

DSRI=(Receivables_t / Revenue_t) / (Receivables_t-1 / Revenue_t-1)
=(463.9 / 1967.5) / (338 / 2352.6)
=0.23578145 / 0.14367083
=1.6411

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.

GMI=GrossMargin_t-1 / GrossMargin_t
=(GrossProfit_t-1 / Revenue_t-1) / (GrossProfit_t / Revenue_t)
=(327.1 / 2352.6) / (258.4 / 1967.5)
=0.5717079 / 0.59120712
=0.967

3. AQI = Asset Quality Index

AQI is the ratio of asset quality in year t to year t-1.

Asset quality is measured as the ratio of non-current assets other than plant, property and equipment to total assets.

AQI=(1 - (CurrentAssets_t + PPE_t) / TotalAssets_t) / (1 - (CurrentAssets_t-1 + PPE_t-1) / TotalAssets_t-1)
=(1 - (1092.7 + 405.2) / 3808.6) / (1 - (1578.3 + 467.3) / 4347.5)
=0.60670588 / 0.52947671
=1.1459

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.

SGI=Sales_t / Sales_t-1
=Revenue_t / Revenue_t-1
=1967.5 / 2352.6
=0.8363

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))
=(225.2 / (225.2 + 467.3)) / (176 / (176 + 405.2))
=0.32519856 / 0.30282175
=1.0739

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)
=(447.2 / 1967.5) / (478.3 / 2352.6)
=0.22729352 / 0.20330698
=1.118

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)
=((1810.2 + 435.2) / 3808.6) / ((1356.4 + 1460.4) / 4347.5)
=0.58956047 / 0.64791259
=0.9099

8. TATA = Total Accruals to Total Assets

Total accruals calculated as the change in working capital accounts other than cash less depreciation.

TATA=(IncomefromContinuingOperations_t - CashFlowsfromOperations_t) / TotalAssets_t
=(NetIncome_t - NonOperatingIncome_t - CashFlowsfromOperations_t) / TotalAssets_t
=(203.7 - -5.9 - 226) / 3808.6
=-0.0043

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 -2.00 signals that the company is likely to be a manipulator.


Related Terms

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


Historical Data

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.

International Game Technology Annual Data

Sep05Sep06Sep07Sep08Sep09Sep10Sep11Sep12Sep13Sep14
DSRI 0.95161.02041.11831.11190.90470.92381.11970.98530.92381.0748
GMI 1.0610.91630.96681.00171.03520.9660.96941.01091.00230.9729
AQI 1.00610.99761.05290.98691.07990.93570.95341.09050.88631.1576
SGI 0.95761.05561.04370.95330.84590.940.98481.0991.08880.8789
DEPI 0.85511.09591.04720.97740.98461.1520.98940.96270.93261.0305
SGAI 1.06911.11621.01531.17551.1270.86041.04351.0571.03041.1249
LVGI 1.0511.01041.42061.24330.97250.88450.93221.10091.07830.9747
TATA -0.0744-0.0404-0.0752-0.0268-0.0873-0.0961-0.0798-0.0463-0.03840.0143
M-score -2.92-2.66-2.81-2.66-3.08-3.02-2.78-2.63-2.73-2.41

International Game Technology Quarterly Data

Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14Dec14
DSRI 0.99990.99611.0121.08880.92370.99220.89340.95961.07481.6411
GMI 1.01040.9920.99120.97621.00211.01341.00751.00410.9730.967
AQI 1.09051.11790.98440.96610.88630.89740.99981.04141.15761.1459
SGI 1.08291.13671.13831.13651.08891.05240.98740.92040.87890.8363
DEPI 0.96270.93880.88570.92380.93260.94850.99241.01771.03051.0739
SGAI 1.05351.01580.9740.94211.03071.07951.17891.20911.12741.118
LVGI 1.10091.08711.13850.94911.07831.15721.10791.09050.97470.9099
TATA -0.0463-0.0514-0.0415-0.037-0.0384-0.0330.0080.01470.0142-0.0043
M-score -2.63-2.60-2.60-2.46-2.73-2.70-2.61-2.56-2.41-2.00
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