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GuruFocus has detected 6 Warning Signs with Investors Real Estate Trust $IRET.
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Investors Real Estate Trust (NYSE:IRET)
Beneish M-Score
-3.13 (As of Today)

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 -3.13 suggests that the company is not a manipulator.

IRET' s Beneish M-Score Range Over the Past 10 Years
Min: -300.58   Max: 6.32
Current: -3.13

-300.58
6.32

During the past 13 years, the highest Beneish M-Score of Investors Real Estate Trust was 6.32. The lowest was -300.58. And the median was -2.41.


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 * 0.44+0.528 * 0.9469+0.404 * 0.9988+0.892 * 1.2059+0.115 * 0.9944
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.3326+4.679 * -0.0454-0.327 * 1.0549
=-3.13

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

This Year (Jan17) TTM:Last Year (Jan16) TTM:
Accounts Receivable was $12.0 Mil.
Revenue was 51.174 + 50.609 + 49.611 + 48.523 = $199.9 Mil.
Gross Profit was 34.14 + 34.795 + 33.554 + 33.616 = $136.1 Mil.
Total Current Assets was $72.8 Mil.
Total Assets was $1,609.1 Mil.
Property, Plant and Equipment(Net PPE) was $0.9 Mil.
Depreciation, Depletion and Amortization(DDA) was $58.7 Mil.
Selling, General & Admin. Expense(SGA) was $11.4 Mil.
Total Current Liabilities was $252.6 Mil.
Long-Term Debt was $727.9 Mil.
Net Income was 23.11 + 11.6 + -21.643 + 11.003 = $24.1 Mil.
Non Operating Income was 0.688 + -0.066 + 9.431 + 11.824 = $21.9 Mil.
Cash Flow from Operations was 20.311 + 19.633 + 15.755 + 19.554 = $75.3 Mil.
Accounts Receivable was $22.7 Mil.
Revenue was 48.406 + 46.346 + 45.045 + 25.979 = $165.8 Mil.
Gross Profit was 32.994 + 31.294 + 31.557 + 11.024 = $106.9 Mil.
Total Current Assets was $74.3 Mil.
Total Assets was $1,695.8 Mil.
Property, Plant and Equipment(Net PPE) was $1.4 Mil.
Depreciation, Depletion and Amortization(DDA) was $67.7 Mil.
Selling, General & Admin. Expense(SGA) was $7.1 Mil.
Total Current Liabilities was $77.7 Mil.
Long-Term Debt was $901.9 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)
=(12.025 / 199.917) / (22.662 / 165.776)
=0.06014996 / 0.13670254
=0.44

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)
=(106.869 / 165.776) / (136.105 / 199.917)
=0.64465906 / 0.68080754
=0.9469

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 - (72.776 + 0.915) / 1609.089) / (1 - (74.256 + 1.442) / 1695.809)
=0.95420328 / 0.95536172
=0.9988

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
=199.917 / 165.776
=1.2059

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))
=(67.731 / (67.731 + 1.442)) / (58.679 / (58.679 + 0.915))
=0.97915372 / 0.98464611
=0.9944

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)
=(11.389 / 199.917) / (7.087 / 165.776)
=0.05696864 / 0.04275046
=1.3326

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)
=((727.948 + 252.642) / 1609.089) / ((901.909 + 77.727) / 1695.809)
=0.60940694 / 0.57768062
=1.0549

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
=(24.07 - 21.877 - 75.253) / 1609.089
=-0.0454

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 -3.13 suggests that the company will not 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 local exchange's currency.

Investors Real Estate Trust Annual Data

Apr07Apr08Apr09Apr10Apr11Apr12Apr13Apr14Apr15Apr16
DSRI 1.17341.17260.60611.86131.13541.27914.14621.81030.05760.6072
GMI 01.35251.0121.00061.02890.96590.98561.07590.98771.0204
AQI 0.56991.43480.904919.55311.00490.9980.97461.02271.01730.9869
SGI 1.14321.11961.08520.96461.01150.97651.08480.66351.08951.0502
DEPI 0.98210.98530.91950.03861.00490.99580.99471.00460.99161.0012
SGAI 1.62571.02380.9341.2850.95291.15871.05111.32411.01020.9074
LVGI 1.07150.99351.0180.96140.991.00740.88720.98291.08410.9389
TATA -0.0309-0.0312-0.0323-0.0358-0.0241-0.0336-0.0279-0.0566-0.0485-0.0044
M-score -3.17-2.00-2.955.46-2.43-2.450.37-2.30-3.52-2.78

Investors Real Estate Trust Quarterly Data

Oct14Jan15Apr15Jul15Oct15Jan16Apr16Jul16Oct16Jan17
DSRI 0.21260.28560.05762.33194.40992.90940.60720.51790.73730.44
GMI 1.08411.09070.98771.00211.031.05591.02041.01050.97240.9469
AQI 1.01181.00841.01731.0181.00241.00560.98690.99630.99010.9988
SGI 0.51960.45021.08951.17781.26981.39741.05021.10121.15761.2059
DEPI 1.00580.99920.99160.9970.99760.99861.00120.9960.99550.9944
SGAI 1.34681.44851.07840.69780.61090.49140.90741.1331.18921.3326
LVGI 0.99520.98781.08411.10191.05681.02620.93890.95321.00541.0549
TATA -0.0649-0.064-0.0485-0.0476-0.036-0.0102-0.0044-0.0204-0.0295-0.0454
M-score -3.94-3.95-3.54-1.290.79-0.31-2.78-2.93-2.77-3.13
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