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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.
Inland Real Estate Corporation has a M-score of -2.27 suggests that the company is not a manipulator.
During the past 13 years, the highest Beneish M-Score of Inland Real Estate Corporation was -2.27. The lowest was -7.64. And the median was -2.96.
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 Corporation 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 * 1.2254||+||0.528 * 0.998||+||0.404 * 0.9762||+||0.892 * 1.2092||+||0.115 * 0.9945|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9636||+||4.679 * -0.0408||-||0.327 * 0.972|
|This Year (Dec13) TTM:||Last Year (Dec12) TTM:|
|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.
Net Income was -4.884 + 5.696 + 103.97 + 6.901 = $111.7 Mil.
Non Operating Income was 1.906 + 1.009 + 99.53 + 2.587 = $105.0 Mil.
Cash Flow from Operations was 22.891 + 20.537 + 16.005 + 9.573 = $69.0 Mil.
|Accounts Receivable was $25.1 Mil.
Revenue was 34.814 + 39.434 + 39.362 + 38.908 = $152.5 Mil.
Gross Profit was 30.94 + 34.081 + 34.405 + 24.851 = $124.3 Mil.
Total Current Assets was $52.3 Mil.
Total Assets was $1,243.4 Mil.
Property, Plant and Equipment(Net PPE) was $961.9 Mil.
Depreciation, Depletion and Amortization(DDA) was $55.6 Mil.
Selling, General & Admin. Expense(SGA) was $17.6 Mil.
Total Current Liabilities was $54.5 Mil.
Long-Term Debt was $745.7 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)|
|=||(37.155 / 184.422)||/||(25.076 / 152.518)|
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)|
|=||(45.715 / 152.518)||/||(41.66 / 184.422)|
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 - (48.413 + 1206.186) / 1529.937)||/||(1 - (52.292 + 961.895) / 1243.405)|
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))|
|=||(55.554 / (55.554 + 961.895))||/||(70.069 / (70.069 + 1206.186))|
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)|
|=||(20.452 / 184.422)||/||(17.552 / 152.518)|
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)|
|=||((851.622 + 105.433) / 1529.937)||/||((745.688 + 54.5) / 1243.405)|
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|
|=||(111.683 - 105.032||-||69.006)||/||1529.937|
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 Corporation has a M-score of -2.27 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 Corporation Annual Data
Inland Real Estate Corporation Quarterly Data