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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 -2.21. The lowest was -3.15. And the median was -2.72.
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 * 0.9475||+||0.528 * 0.9539||+||0.404 * 1.0091||+||0.892 * 1.0991||+||0.115 * 0.9553|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0216||+||4.679 * -0.0593||-||0.327 * 0.9833|
|This Year (Dec16) TTM:||Last Year (Dec15) TTM:|
|Accounts Receivable was $976 Mil.|
Revenue was 1321.216 + 1265.65 + 1285.469 + 1281.561 = $5,154 Mil.
Gross Profit was 500.327 + 503.713 + 502.997 + 511.022 = $2,018 Mil.
Total Current Assets was $2,290 Mil.
Total Assets was $15,060 Mil.
Property, Plant and Equipment(Net PPE) was $1,558 Mil.
Depreciation, Depletion and Amortization(DDA) was $882 Mil.
Selling, General & Admin. Expense(SGA) was $948 Mil.
Total Current Liabilities was $2,342 Mil.
Long-Term Debt was $7,863 Mil.
Net Income was 233.318 + -1.903 + 72.696 + -92.774 = $211 Mil.
Non Operating Income was 218.946 + -18.236 + 87.577 + -168.882 = $119 Mil.
Cash Flow from Operations was 364.346 + 97.19 + 318.202 + 205.605 = $985 Mil.
|Accounts Receivable was $937 Mil.
Revenue was 1364.957 + 1201.573 + 1274.284 + 848.242 = $4,689 Mil.
Gross Profit was 510.634 + 453.963 + 480.392 + 306.409 = $1,751 Mil.
Total Current Assets was $2,485 Mil.
Total Assets was $15,115 Mil.
Property, Plant and Equipment(Net PPE) was $1,477 Mil.
Depreciation, Depletion and Amortization(DDA) was $780 Mil.
Selling, General & Admin. Expense(SGA) was $845 Mil.
Total Current Liabilities was $2,011 Mil.
Long-Term Debt was $8,406 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)|
|=||(976.029 / 5153.896)||/||(937.193 / 4689.056)|
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)|
|=||(1751.398 / 4689.056)||/||(2018.059 / 5153.896)|
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 - (2289.566 + 1557.515) / 15060.162)||/||(1 - (2485.374 + 1477.195) / 15114.692)|
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))|
|=||(779.828 / (779.828 + 1477.195))||/||(882.469 / (882.469 + 1557.515))|
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)|
|=||(948.414 / 5153.896)||/||(844.648 / 4689.056)|
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)|
|=||((7863.085 + 2341.791) / 15060.162)||/||((8405.561 + 2010.626) / 15114.692)|
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|
|=||(211.337 - 119.405||-||985.343)||/||15060.162|
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 -2.74 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