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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 5.45. The lowest was -11.07. And the median was -2.28.
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 * 0.6072||+||0.528 * 1.0204||+||0.404 * 0.4008||+||0.892 * 1.0502||+||0.115 * 1.2681|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9074||+||4.679 * -0.0044||-||0.327 * 0.9389|
|This Year (Apr16) TTM:||Last Year (Apr15) TTM:|
|Accounts Receivable was $1.5 Mil.|
Revenue was 29.322 + 55.772 + 52.27 + 50.956 = $188.3 Mil.
Gross Profit was 13.218 + 40.767 + 37.672 + 37.804 = $129.5 Mil.
Total Current Assets was $66.7 Mil.
Total Assets was $1,760.2 Mil.
Property, Plant and Equipment(Net PPE) was $1,442.2 Mil.
Depreciation, Depletion and Amortization(DDA) was $65.5 Mil.
Selling, General & Admin. Expense(SGA) was $11.3 Mil.
Total Current Liabilities was $134.9 Mil.
Long-Term Debt was $899.5 Mil.
Net Income was 11.003 + 39.797 + 16.666 + 4.54 = $72.0 Mil.
Non Operating Income was 11.824 + 1.581 + -0.006 + -0.124 = $13.3 Mil.
Cash Flow from Operations was 19.554 + 12.621 + 9.536 + 24.782 = $66.5 Mil.
|Accounts Receivable was $2.4 Mil.
Revenue was 25.979 + 52.939 + 51.189 + 49.214 = $179.3 Mil.
Gross Profit was 11.024 + 39.495 + 38.549 + 36.718 = $125.8 Mil.
Total Current Assets was $49.3 Mil.
Total Assets was $1,997.8 Mil.
Property, Plant and Equipment(Net PPE) was $1,237.1 Mil.
Depreciation, Depletion and Amortization(DDA) was $72.1 Mil.
Selling, General & Admin. Expense(SGA) was $11.8 Mil.
Total Current Liabilities was $517.3 Mil.
Long-Term Debt was $733.2 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)|
|=||(1.524 / 188.32)||/||(2.39 / 179.321)|
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)|
|=||(125.786 / 179.321)||/||(129.461 / 188.32)|
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 - (66.748 + 1442.213) / 1760.177)||/||(1 - (49.299 + 1237.118) / 1997.837)|
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))|
|=||(72.078 / (72.078 + 1237.118))||/||(65.455 / (65.455 + 1442.213))|
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)|
|=||(11.267 / 188.32)||/||(11.824 / 179.321)|
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)|
|=||((899.454 + 134.939) / 1760.177)||/||((733.176 + 517.339) / 1997.837)|
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|
|=||(72.006 - 13.275||-||66.493)||/||1760.177|
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 -2.98 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