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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 Corp has a M-score of -2.78 suggests that the company is not a 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 -2.82.
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 * 0.8632||+||0.528 * 0.7744||+||0.404 * 1.152||+||0.892 * 1.1606||+||0.115 * 0.7627|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0486||+||4.679 * -0.0476||-||0.327 * 1.0133|
|This Year (Sep14) TTM:||Last Year (Sep13) TTM:|
|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.
Net Income was 4.576 + 12.646 + 15.424 + -4.884 = $27.8 Mil.
Non Operating Income was 0.703 + 10.65 + 13.06 + 1.906 = $26.3 Mil.
Cash Flow from Operations was 14.33 + 20.96 + 16.08 + 22.891 = $74.3 Mil.
|Accounts Receivable was $36.7 Mil.
Revenue was 51.836 + 42.931 + 40.931 + 39.081 = $174.8 Mil.
Gross Profit was 45.715 + 37.142 + 26.064 + 4.983 = $113.9 Mil.
Total Current Assets was $60.2 Mil.
Total Assets was $1,570.9 Mil.
Property, Plant and Equipment(Net PPE) was $1,229.2 Mil.
Depreciation, Depletion and Amortization(DDA) was $60.9 Mil.
Selling, General & Admin. Expense(SGA) was $19.1 Mil.
Total Current Liabilities was $102.4 Mil.
Long-Term Debt was $878.5 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)|
|=||(36.788 / 202.847)||/||(36.723 / 174.779)|
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)|
|=||(42.227 / 174.779)||/||(42.083 / 202.847)|
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 - (52.197 + 1162.303) / 1530.493)||/||(1 - (60.201 + 1229.19) / 1570.932)|
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))|
|=||(60.876 / (60.876 + 1229.19))||/||(76.649 / (76.649 + 1162.303))|
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)|
|=||(23.258 / 202.847)||/||(19.111 / 174.779)|
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)|
|=||((871.891 + 96.562) / 1530.493)||/||((878.547 + 102.438) / 1570.932)|
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|
|=||(27.762 - 26.319||-||74.261)||/||1530.493|
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