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Investors Real Estate Trust (NYSE:IRET)
Beneish M-Score
2.08 (As of Today)

Warning Sign:

Beneish M-Score 2.08 higher than -2.22, which implies that it might have manipulated its financial results.

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.

Investors Real Estate Trust has a M-score of 1.41 signals that the company is a manipulator.

IRET' s Beneish M-Score Range Over the Past 10 Years
Min: -3.62   Max: 6.68
Current: 2.08

-3.62
6.68

During the past 13 years, the highest Beneish M-Score of Investors Real Estate Trust was 6.68. The lowest was -3.62. And the median was -2.44.


Definition

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 * 5.367+0.528 * 0.9978+0.404 * 1.0024+0.892 * 1.0434+0.115 * 0.9976
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.8928+4.679 * -0.036-0.327 * 1.0568
=1.41

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.

This Year (Oct15) TTM:Last Year (Oct14) TTM:
Accounts Receivable was $20.8 Mil.
Revenue was 52.27 + 50.956 + 70.759 + 72.916 = $246.9 Mil.
Gross Profit was 37.672 + 37.804 + 51.838 + 53.952 = $181.3 Mil.
Total Current Assets was $79.3 Mil.
Total Assets was $1,782.0 Mil.
Property, Plant and Equipment(Net PPE) was $1.4 Mil.
Depreciation, Depletion and Amortization(DDA) was $70.5 Mil.
Selling, General & Admin. Expense(SGA) was $14.6 Mil.
Total Current Liabilities was $218.5 Mil.
Long-Term Debt was $857.5 Mil.
Net Income was 16.666 + 4.54 + 10.753 + 8.371 = $40.3 Mil.
Non Operating Income was -0.006 + -0.124 + 7.251 + 1.06 = $8.2 Mil.
Cash Flow from Operations was 9.536 + 24.782 + 33.405 + 28.553 = $96.3 Mil.
Accounts Receivable was $3.7 Mil.
Revenue was 51.189 + 49.214 + 67.806 + 68.433 = $236.6 Mil.
Gross Profit was 38.549 + 36.718 + 47.385 + 50.704 = $173.4 Mil.
Total Current Assets was $91.7 Mil.
Total Assets was $1,961.5 Mil.
Property, Plant and Equipment(Net PPE) was $1.6 Mil.
Depreciation, Depletion and Amortization(DDA) was $71.2 Mil.
Selling, General & Admin. Expense(SGA) was $15.6 Mil.
Total Current Liabilities was $107.5 Mil.
Long-Term Debt was $1,013.2 Mil.



1. DSRI = Days Sales in Receivables Index

Measured as the ratio of days’ sales in receivables in year t to year t-1.

A large increase in DSR could be indicative of revenue inflation.

DSRI=(Receivables_t / Revenue_t) / (Receivables_t-1 / Revenue_t-1)
=(20.825 / 246.901) / (3.719 / 236.642)
=0.08434555 / 0.01571572
=5.367

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.

GMI=GrossMargin_t-1 / GrossMargin_t
=(GrossProfit_t-1 / Revenue_t-1) / (GrossProfit_t / Revenue_t)
=(37.804 / 236.642) / (37.672 / 246.901)
=0.73256649 / 0.73416471
=0.9978

3. AQI = Asset Quality Index

AQI is the ratio of asset quality in year t to year t-1.

Asset quality is measured as the ratio of non-current assets other than plant, property and equipment to total assets.

AQI=(1 - (CurrentAssets_t + PPE_t) / TotalAssets_t) / (1 - (CurrentAssets_t-1 + PPE_t-1) / TotalAssets_t-1)
=(1 - (79.315 + 1.408) / 1781.953) / (1 - (91.659 + 1.598) / 1961.47)
=0.9546997 / 0.95245556
=1.0024

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.

SGI=Sales_t / Sales_t-1
=Revenue_t / Revenue_t-1
=246.901 / 236.642
=1.0434

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))
=(71.209 / (71.209 + 1.598)) / (70.498 / (70.498 + 1.408))
=0.97805156 / 0.98041888
=0.9976

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)
=(14.569 / 246.901) / (15.641 / 236.642)
=0.05900746 / 0.06609562
=0.8928

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)
=((857.45 + 218.525) / 1781.953) / ((1013.161 + 107.537) / 1961.47)
=0.60381783 / 0.57135618
=1.0568

8. TATA = Total Accruals to Total Assets

Total accruals calculated as the change in working capital accounts other than cash less depreciation.

TATA=(IncomefromContinuingOperations_t - CashFlowsfromOperations_t) / TotalAssets_t
=(NetIncome_t - NonOperatingIncome_t - CashFlowsfromOperations_t) / TotalAssets_t
=(40.33 - 8.181 - 96.276) / 1781.953
=-0.036

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 1.41 signals that the company is likely to be a manipulator.


Related Terms

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


Historical Data

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.

Investors Real Estate Trust Annual Data

Apr06Apr07Apr08Apr09Apr10Apr11Apr12Apr13Apr14Apr15
DSRI 1.17341.17260.60611.86131.13541.22344.33491.11550.7577
GMI 01.35251.0121.00061.02890.95980.99191.01880.9915
AQI 0.56991.43480.904919.55311.00490.9980.97461.02271.0055
SGI 1.14321.11961.08520.96461.01151.02091.03761.07681.0602
DEPI 0.98210.98530.91950.03861.00490.99580.99471.00460.9986
SGAI 1.62571.02380.9341.2850.95291.12471.08291.20821.0473
LVGI 1.07150.99351.0180.96140.991.00740.88720.98290.9591
TATA -0.0309-0.0312-0.0323-0.0358-0.0241-0.0336-0.0279-0.0568-0.0485
M-score -3.17-2.00-2.955.46-2.43-2.460.50-2.58-2.87

Investors Real Estate Trust Quarterly Data

Jul13Oct13Jan14Apr14Jul14Oct14Jan15Apr15Jul15Oct15
DSRI 5.251711.10041.39121.12640.19860.12050.14050.87912.8075.367
GMI 0.99821.01321.01551.01981.01661.01461.01360.98640.98860.9978
AQI 0.96851.00550.99691.02271.01881.01181.00841.00551.0181.0024
SGI 1.0571.06251.07331.06630.98670.91670.91510.91380.97851.0434
DEPI 0.99620.99591.0041.00461.00581.00580.99920.99860.9970.9976
SGAI 1.16391.28861.26351.16381.23951.13971.12121.14420.89970.8928
LVGI 0.87310.95480.94410.98291.00210.99520.98780.95911.10191.0568
TATA -0.0289-0.0275-0.0301-0.0568-0.0583-0.065-0.0641-0.0485-0.0476-0.036
M-score 1.356.71-2.22-2.57-3.53-3.68-3.65-2.91-1.071.41
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