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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 Inland Real Estate Corp was -2.40. The lowest was -4.37. And the median was -2.83.
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 Inland Real Estate Corp 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 * 0.9263||+||0.528 * 0.9696||+||0.404 * 1.183||+||0.892 * 1.1103||+||0.115 * 0.9521|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0228||+||4.679 * -0.0449||-||0.327 * 0.9426|
|This Year (Dec14) TTM:||Last Year (Dec13) TTM:|
|Accounts Receivable was $38.2 Mil.|
Revenue was 50.638 + 48.21 + 48.807 + 57.106 = $204.8 Mil.
Gross Profit was 43.387 + 42.083 + 42.227 + 44.732 = $172.4 Mil.
Total Current Assets was $56.6 Mil.
Total Assets was $1,573.0 Mil.
Property, Plant and Equipment(Net PPE) was $1,181.5 Mil.
Depreciation, Depletion and Amortization(DDA) was $72.3 Mil.
Selling, General & Admin. Expense(SGA) was $23.2 Mil.
Total Current Liabilities was $102.7 Mil.
Long-Term Debt was $824.8 Mil.
Net Income was 6.528 + 4.576 + 12.646 + 15.424 = $39.2 Mil.
Non Operating Income was 2.959 + 0.703 + 10.65 + 13.06 = $27.4 Mil.
Cash Flow from Operations was 31.095 + 14.33 + 20.96 + 16.08 = $82.5 Mil.
|Accounts Receivable was $37.2 Mil.
Revenue was 48.724 + 51.836 + 42.931 + 40.931 = $184.4 Mil.
Gross Profit was 41.66 + 45.715 + 37.142 + 26.064 = $150.6 Mil.
Total Current Assets was $48.4 Mil.
Total Assets was $1,529.9 Mil.
Property, Plant and Equipment(Net PPE) was $1,206.2 Mil.
Depreciation, Depletion and Amortization(DDA) was $70.1 Mil.
Selling, General & Admin. Expense(SGA) was $20.5 Mil.
Total Current Liabilities was $105.4 Mil.
Long-Term Debt was $851.6 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)|
|=||(38.211 / 204.761)||/||(37.155 / 184.422)|
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)|
|=||(42.083 / 184.422)||/||(43.387 / 204.761)|
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 - (56.596 + 1181.463) / 1572.951)||/||(1 - (48.413 + 1206.186) / 1529.937)|
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))|
|=||(70.069 / (70.069 + 1206.186))||/||(72.295 / (72.295 + 1181.463))|
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)|
|=||(23.225 / 204.761)||/||(20.452 / 184.422)|
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)|
|=||((824.769 + 102.716) / 1572.951)||/||((851.622 + 105.433) / 1529.937)|
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|
|=||(39.174 - 27.372||-||82.465)||/||1572.951|
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.
Inland Real Estate Corp has a M-score of -2.59 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
Inland Real Estate Corp Annual Data
Inland Real Estate Corp Quarterly Data