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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 2.25. The lowest was -10.30. And the median was -2.58.
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 * 0.9512||+||0.528 * 0.9837||+||0.404 * 0.9121||+||0.892 * 0.9958||+||0.115 * 1.0537|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.2362||+||4.679 * -0.0584||-||0.327 * 1.0235|
|This Year (Dec15) TTM:||Last Year (Dec14) TTM:|
|Accounts Receivable was $36.2 Mil.|
Revenue was 50.553 + 48.244 + 49.336 + 55.767 = $203.9 Mil.
Gross Profit was 43.089 + 41.73 + 42.884 + 46.847 = $174.6 Mil.
Total Current Assets was $45.7 Mil.
Total Assets was $1,521.5 Mil.
Property, Plant and Equipment(Net PPE) was $1,180.3 Mil.
Depreciation, Depletion and Amortization(DDA) was $68.3 Mil.
Selling, General & Admin. Expense(SGA) was $28.6 Mil.
Total Current Liabilities was $69.2 Mil.
Long-Term Debt was $849.1 Mil.
Net Income was 1.656 + 12.274 + 8.661 + 2.94 = $25.5 Mil.
Non Operating Income was 3.747 + 9.326 + 1.771 + 2.136 = $17.0 Mil.
Cash Flow from Operations was 23.273 + 24.07 + 29.27 + 20.739 = $97.4 Mil.
|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 $61.6 Mil.
Long-Term Debt was $865.9 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)|
|=||(36.195 / 203.9)||/||(38.211 / 204.761)|
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)|
|=||(172.429 / 204.761)||/||(174.55 / 203.9)|
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 - (45.718 + 1180.303) / 1521.5)||/||(1 - (56.596 + 1181.463) / 1572.951)|
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))|
|=||(72.295 / (72.295 + 1181.463))||/||(68.327 / (68.327 + 1180.303))|
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)|
|=||(28.591 / 203.9)||/||(23.225 / 204.761)|
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)|
|=||((849.09 + 69.154) / 1521.5)||/||((865.877 + 61.608) / 1572.951)|
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|
|=||(25.531 - 16.98||-||97.352)||/||1521.5|
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 -2.89 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