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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 6.32. The lowest was -300.58. And the median was -2.35.
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 * 0.7844||+||0.528 * 1.0084||+||0.404 * 0.9901||+||0.892 * 1.0881||+||0.115 * 0.9955|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0001||+||4.679 * -0.0295||-||0.327 * 1.0054|
|This Year (Oct16) TTM:||Last Year (Oct15) TTM:|
|Accounts Receivable was $17.8 Mil.|
Revenue was 50.609 + 49.611 + 29.322 + 55.772 = $185.3 Mil.
Gross Profit was 34.795 + 33.554 + 13.218 + 40.767 = $122.3 Mil.
Total Current Assets was $91.1 Mil.
Total Assets was $1,679.3 Mil.
Property, Plant and Equipment(Net PPE) was $0.9 Mil.
Depreciation, Depletion and Amortization(DDA) was $60.2 Mil.
Selling, General & Admin. Expense(SGA) was $8.8 Mil.
Total Current Liabilities was $157.2 Mil.
Long-Term Debt was $862.3 Mil.
Net Income was 11.6 + -21.643 + 11.003 + 39.797 = $40.8 Mil.
Non Operating Income was -0.066 + 9.431 + 11.824 + 1.581 = $22.8 Mil.
Cash Flow from Operations was 19.633 + 15.755 + 19.554 + 12.621 = $67.6 Mil.
|Accounts Receivable was $20.8 Mil.
Revenue was 46.346 + 45.045 + 25.979 + 52.939 = $170.3 Mil.
Gross Profit was 31.294 + 31.557 + 11.024 + 39.495 = $113.4 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 $8.1 Mil.
Total Current Liabilities was $218.5 Mil.
Long-Term Debt was $857.5 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)|
|=||(17.774 / 185.314)||/||(20.825 / 170.309)|
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)|
|=||(113.37 / 170.309)||/||(122.334 / 185.314)|
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 - (91.07 + 0.928) / 1679.319)||/||(1 - (79.315 + 1.408) / 1781.953)|
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))|
|=||(70.498 / (70.498 + 1.408))||/||(60.173 / (60.173 + 0.928))|
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)|
|=||(8.844 / 185.314)||/||(8.127 / 170.309)|
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)|
|=||((862.31 + 157.208) / 1679.319)||/||((857.45 + 218.525) / 1781.953)|
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|
|=||(40.757 - 22.77||-||67.563)||/||1679.319|
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 -2.74 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