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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 6.71. The lowest was -3.57. And the median was -2.46.
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 * 0.1216||+||0.528 * 1.0058||+||0.404 * 1.0084||+||0.892 * 1.0574||+||0.115 * 0.9992|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.1226||+||4.679 * -0.0642||-||0.327 * 0.9878|
|This Year (Jan15) TTM:||Last Year (Jan14) TTM:|
|Accounts Receivable was $5.6 Mil.|
Revenue was 72.916 + 70.885 + 68.63 + 66.179 = $278.6 Mil.
Gross Profit was 53.952 + 53.259 + 51.349 + 47.089 = $205.6 Mil.
Total Current Assets was $98.3 Mil.
Total Assets was $2,001.3 Mil.
Property, Plant and Equipment(Net PPE) was $1.6 Mil.
Depreciation, Depletion and Amortization(DDA) was $71.3 Mil.
Selling, General & Admin. Expense(SGA) was $18.8 Mil.
Total Current Liabilities was $120.4 Mil.
Long-Term Debt was $1,006.2 Mil.
Net Income was 8.371 + 5.114 + -0.151 + -28.542 = $-15.2 Mil.
Non Operating Income was 1.06 + 1.367 + -2.862 + 0.605 = $0.2 Mil.
Cash Flow from Operations was 28.553 + 28.836 + 23.385 + 32.41 = $113.2 Mil.
|Accounts Receivable was $43.3 Mil.
Revenue was 68.433 + 65.772 + 65.098 + 64.184 = $263.5 Mil.
Gross Profit was 50.704 + 49.215 + 48.134 + 47.563 = $195.6 Mil.
Total Current Assets was $108.4 Mil.
Total Assets was $1,904.6 Mil.
Property, Plant and Equipment(Net PPE) was $1.7 Mil.
Depreciation, Depletion and Amortization(DDA) was $73.1 Mil.
Selling, General & Admin. Expense(SGA) was $15.8 Mil.
Total Current Liabilities was $76.8 Mil.
Long-Term Debt was $1,008.5 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)|
|=||(5.574 / 278.61)||/||(43.349 / 263.487)|
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)|
|=||(53.259 / 263.487)||/||(53.952 / 278.61)|
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 - (98.294 + 1.619) / 2001.342)||/||(1 - (108.402 + 1.719) / 1904.558)|
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))|
|=||(73.08 / (73.08 + 1.719))||/||(71.31 / (71.31 + 1.619))|
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)|
|=||(18.784 / 278.61)||/||(15.825 / 263.487)|
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)|
|=||((1006.179 + 120.401) / 2001.342)||/||((1008.524 + 76.837) / 1904.558)|
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|
|=||(-15.208 - 0.17||-||113.184)||/||2001.342|
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 -3.55 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