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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 -3.77. And the median was -2.45.
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 * 0.104||+||0.528 * 1.0066||+||0.404 * 1.0118||+||0.892 * 1.062||+||0.115 * 0.9963|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.2294||+||4.679 * -0.1058||-||0.327 * 0.9952|
|This Year (Oct14) TTM:||Last Year (Oct13) TTM:|
|Accounts Receivable was $3.7 Mil.|
Revenue was 70.885 + 68.63 + 66.983 + 67.629 = $274.1 Mil.
Gross Profit was 53.259 + 51.349 + 47.222 + 50.571 = $202.4 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 $124.4 Mil.
Selling, General & Admin. Expense(SGA) was $19.5 Mil.
Total Current Liabilities was $107.5 Mil.
Long-Term Debt was $1,013.2 Mil.
Net Income was 5.114 + -0.151 + -28.542 + 3.503 = $-20.1 Mil.
Non Operating Income was 1.367 + -2.862 + 0.472 + 0.167 = $-0.9 Mil.
Cash Flow from Operations was 108.554 + 23.385 + 32.41 + 23.923 = $188.3 Mil.
|Accounts Receivable was $33.7 Mil.
Revenue was 65.772 + 65.098 + 64.184 + 63.08 = $258.1 Mil.
Gross Profit was 49.215 + 48.134 + 47.563 + 46.947 = $191.9 Mil.
Total Current Assets was $110.1 Mil.
Total Assets was $1,896.2 Mil.
Property, Plant and Equipment(Net PPE) was $1.2 Mil.
Depreciation, Depletion and Amortization(DDA) was $71.8 Mil.
Selling, General & Admin. Expense(SGA) was $15.0 Mil.
Total Current Liabilities was $67.5 Mil.
Long-Term Debt was $1,021.2 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)|
|=||(3.719 / 274.127)||/||(33.661 / 258.134)|
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)|
|=||(51.349 / 258.134)||/||(53.259 / 274.127)|
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 - (91.659 + 1.598) / 1961.47)||/||(1 - (110.081 + 1.191) / 1896.247)|
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))|
|=||(71.817 / (71.817 + 1.191))||/||(124.407 / (124.407 + 1.598))|
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)|
|=||(19.545 / 274.127)||/||(14.97 / 258.134)|
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)|
|=||((1013.161 + 107.537) / 1961.47)||/||((1021.17 + 67.453) / 1896.247)|
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|
|=||(-20.076 - -0.856||-||188.272)||/||1961.47|
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 -3.77 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