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Investors Real Estate Trust (NYSE:IRET)
Beneish M-Score
-0.28 (As of Today)

Warning Sign:

Beneish M-Score -0.28 higher than -2.22, which implies that it might have manipulated its financial results.

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 -0.28 signals that the company is a manipulator.

IRET' s Beneish M-Score Range Over the Past 10 Years
Min: -300.58   Max: 6.32
Current: -0.28

-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 -2.28.


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 * 3.1128+0.528 * 1.0063+0.404 * 1.0056+0.892 * 1.3061+0.115 * 0.9986
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.815+4.679 * -0.0102-0.327 * 1.0262
=-0.28

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.

This Year (Jan16) TTM:Last Year (Jan15) TTM:
Accounts Receivable was $22.7 Mil.
Revenue was 55.772 + 52.27 + 50.956 + 129.848 = $288.8 Mil.
Gross Profit was 40.767 + 37.672 + 37.804 + 94.218 = $210.5 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 $16.5 Mil.
Total Current Liabilities was $77.7 Mil.
Long-Term Debt was $901.9 Mil.
Net Income was 39.797 + 16.666 + 4.54 + 10.753 = $71.8 Mil.
Non Operating Income was 1.581 + -0.006 + -0.124 + 7.256 = $8.7 Mil.
Cash Flow from Operations was 12.621 + 9.536 + 24.782 + 33.405 = $80.3 Mil.
Accounts Receivable was $5.6 Mil.
Revenue was 52.939 + 51.189 + 49.214 + 67.806 = $221.1 Mil.
Gross Profit was 39.495 + 38.549 + 36.718 + 47.385 = $162.1 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 $15.5 Mil.
Total Current Liabilities was $120.4 Mil.
Long-Term Debt was $1,006.2 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)
=(22.662 / 288.846) / (5.574 / 221.148)
=0.07845703 / 0.02520484
=3.1128

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)
=(162.147 / 221.148) / (210.461 / 288.846)
=0.73320582 / 0.72862702
=1.0063

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 - (74.256 + 1.442) / 1695.809) / (1 - (98.294 + 1.619) / 2001.342)
=0.95536172 / 0.950077
=1.0056

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
=288.846 / 221.148
=1.3061

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))
=(71.31 / (71.31 + 1.619)) / (67.731 / (67.731 + 1.442))
=0.97780033 / 0.97915372
=0.9986

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)
=(16.484 / 288.846) / (15.485 / 221.148)
=0.05706847 / 0.07002098
=0.815

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)
=((901.909 + 77.727) / 1695.809) / ((1006.179 + 120.401) / 2001.342)
=0.57768062 / 0.56291229
=1.0262

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
=(71.756 - 8.707 - 80.344) / 1695.809
=-0.0102

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 -0.28 signals that the company is likely to 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 own currency.

Investors Real Estate Trust Annual Data

Apr06Apr07Apr08Apr09Apr10Apr11Apr12Apr13Apr14Apr15
DSRI 1.53981.17171.17420.60611.7751.17451.22644.19231.17370.7531
GMI 11.00140.99861.36871.0041.02440.96050.98591.02050.9961
AQI 0.93070.56991.43480.904919.55311.00490.9980.97461.02271.0055
SGI 1.10451.14481.11811.08521.01150.97791.01851.07291.02341.0667
DEPI 0.96370.98210.98530.91950.03861.00490.99580.99471.00460.9986
SGAI 0.86510.98961.6820.9341.26150.96231.12671.05911.25141.0409
LVGI 1.03411.07150.99351.0180.96140.991.00740.88720.98290.9591
TATA -0.0315-0.0314-0.0308-0.0324-0.0358-0.0241-0.0337-0.0279-0.0569-0.0485
M-score -2.06-2.54-2.30-2.775.43-2.43-2.460.40-2.58-2.87

Investors Real Estate Trust Quarterly Data

Oct13Jan14Apr14Jul14Oct14Jan15Apr15Jul15Oct15Jan16
DSRI 10.62491.33221.12640.19860.12050.15320.75772.42174.6333.1128
GMI 1.00791.01031.01981.01661.01461.01260.99150.99361.00161.0063
AQI 1.00550.99691.02271.01881.01181.00841.00551.0181.00241.0056
SGI 1.11011.12091.06630.98670.91670.83931.06021.13421.20861.3061
DEPI 0.99591.0041.00461.00581.00580.99920.99860.9970.99760.9986
SGAI 1.25161.22661.16381.23951.13971.16591.0940.87030.86280.815
LVGI 0.95480.94410.98291.00210.99520.98780.95911.10191.05681.0262
TATA -0.0275-0.0301-0.0568-0.0583-0.065-0.0641-0.0485-0.0476-0.036-0.0102
M-score 6.32-2.22-2.57-3.53-3.68-3.72-2.88-1.280.89-0.28
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