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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 Investors Real Estate Trust was 5.45. The lowest was -2.95. And the median was -2.52.
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 Investors Real Estate Trust 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 * 0.7577||+||0.528 * 0.9848||+||0.404 * 1.0055||+||0.892 * 1.0602||+||0.115 * 0.9986|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.1439||+||4.679 * -0.0485||-||0.327 * 0.9591|
|This Year (Apr15) TTM:||Last Year (Apr14) TTM:|
|Accounts Receivable was $30.6 Mil.|
Revenue was 70.759 + 72.916 + 70.885 + 68.63 = $283.2 Mil.
Gross Profit was 51.838 + 53.952 + 53.259 + 51.349 = $210.4 Mil.
Total Current Assets was $85.6 Mil.
Total Assets was $1,997.8 Mil.
Property, Plant and Equipment(Net PPE) was $1.5 Mil.
Depreciation, Depletion and Amortization(DDA) was $72.1 Mil.
Selling, General & Admin. Expense(SGA) was $18.5 Mil.
Total Current Liabilities was $131.6 Mil.
Long-Term Debt was $974.8 Mil.
Net Income was 10.753 + 8.371 + 5.114 + -0.151 = $24.1 Mil.
Non Operating Income was 7.251 + 1.06 + 1.367 + -2.862 = $6.8 Mil.
Cash Flow from Operations was 33.405 + 28.553 + 28.836 + 23.385 = $114.2 Mil.
|Accounts Receivable was $38.1 Mil.
Revenue was 67.806 + 68.433 + 65.772 + 65.098 = $267.1 Mil.
Gross Profit was 47.385 + 50.704 + 49.215 + 48.134 = $195.4 Mil.
Total Current Assets was $89.7 Mil.
Total Assets was $1,869.2 Mil.
Property, Plant and Equipment(Net PPE) was $1.7 Mil.
Depreciation, Depletion and Amortization(DDA) was $73.7 Mil.
Selling, General & Admin. Expense(SGA) was $15.2 Mil.
Total Current Liabilities was $81.6 Mil.
Long-Term Debt was $997.7 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)|
|=||(30.604 / 283.19)||/||(38.098 / 267.109)|
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)|
|=||(53.952 / 267.109)||/||(51.838 / 283.19)|
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 - (85.581 + 1.542) / 1997.837)||/||(1 - (89.682 + 1.681) / 1869.221)|
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))|
|=||(73.723 / (73.723 + 1.681))||/||(72.078 / (72.078 + 1.542))|
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)|
|=||(18.469 / 283.19)||/||(15.229 / 267.109)|
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)|
|=||((974.828 + 131.572) / 1997.837)||/||((997.689 + 81.605) / 1869.221)|
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|
|=||(24.087 - 6.816||-||114.179)||/||1997.837|
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.
Investors Real Estate Trust 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
Investors Real Estate Trust Annual Data
Investors Real Estate Trust Quarterly Data