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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 -2.29. The lowest was -4.37. And the median was -2.80.
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 * 0.9555||+||0.528 * 0.9818||+||0.404 * 0.9287||+||0.892 * 1.0056||+||0.115 * 1.1484|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9916||+||4.679 * -0.0587||-||0.327 * 0.9043|
|This Year (Sep15) TTM:||Last Year (Sep14) TTM:|
|Accounts Receivable was $35.3 Mil.|
Revenue was 48.244 + 49.336 + 55.767 + 50.638 = $204.0 Mil.
Gross Profit was 41.73 + 42.884 + 46.847 + 43.387 = $174.8 Mil.
Total Current Assets was $72.4 Mil.
Total Assets was $1,550.1 Mil.
Property, Plant and Equipment(Net PPE) was $1,180.5 Mil.
Depreciation, Depletion and Amortization(DDA) was $67.2 Mil.
Selling, General & Admin. Expense(SGA) was $23.2 Mil.
Total Current Liabilities was $59.3 Mil.
Long-Term Debt was $827.7 Mil.
Net Income was 12.274 + 8.661 + 2.94 + 6.528 = $30.4 Mil.
Non Operating Income was 9.326 + 1.771 + 2.136 + 2.959 = $16.2 Mil.
Cash Flow from Operations was 24.07 + 29.27 + 20.739 + 31.095 = $105.2 Mil.
|Accounts Receivable was $36.8 Mil.
Revenue was 48.21 + 48.807 + 57.106 + 48.724 = $202.8 Mil.
Gross Profit was 42.083 + 42.227 + 44.732 + 41.66 = $170.7 Mil.
Total Current Assets was $52.2 Mil.
Total Assets was $1,530.5 Mil.
Property, Plant and Equipment(Net PPE) was $1,162.3 Mil.
Depreciation, Depletion and Amortization(DDA) was $76.6 Mil.
Selling, General & Admin. Expense(SGA) was $23.3 Mil.
Total Current Liabilities was $96.6 Mil.
Long-Term Debt was $871.9 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)|
|=||(35.348 / 203.985)||/||(36.788 / 202.847)|
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)|
|=||(42.884 / 202.847)||/||(41.73 / 203.985)|
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 - (72.433 + 1180.457) / 1550.101)||/||(1 - (52.197 + 1162.303) / 1530.493)|
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))|
|=||(76.649 / (76.649 + 1162.303))||/||(67.214 / (67.214 + 1180.457))|
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)|
|=||(23.191 / 203.985)||/||(23.258 / 202.847)|
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)|
|=||((827.688 + 59.315) / 1550.101)||/||((871.891 + 96.562) / 1530.493)|
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|
|=||(30.403 - 16.192||-||105.174)||/||1550.101|
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 -2.78 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