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Beneish M-Score -1.15 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.
During the past 13 years, the highest Beneish M-Score of Investors Real Estate Trust was 6.71. The lowest was -3.62. And the median was -2.46.
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 * 2.5988||+||0.528 * 0.988||+||0.404 * 1.018||+||0.892 * 1.0569||+||0.115 * 0.997|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9246||+||4.679 * -0.0476||-||0.327 * 1.1019|
|This Year (Jul15) TTM:||Last Year (Jul14) TTM:|
|Accounts Receivable was $19.3 Mil.|
Revenue was 50.956 + 70.759 + 72.916 + 70.885 = $265.5 Mil.
Gross Profit was 37.804 + 51.838 + 53.952 + 53.259 = $196.9 Mil.
Total Current Assets was $73.2 Mil.
Total Assets was $2,024.7 Mil.
Property, Plant and Equipment(Net PPE) was $1.5 Mil.
Depreciation, Depletion and Amortization(DDA) was $73.3 Mil.
Selling, General & Admin. Expense(SGA) was $15.9 Mil.
Total Current Liabilities was $452.8 Mil.
Long-Term Debt was $835.6 Mil.
Net Income was 4.54 + 10.753 + 8.371 + 5.114 = $28.8 Mil.
Non Operating Income was -0.124 + 7.251 + 1.06 + 1.367 = $9.6 Mil.
Cash Flow from Operations was 24.782 + 33.405 + 28.553 + 28.836 = $115.6 Mil.
|Accounts Receivable was $7.0 Mil.
Revenue was 49.214 + 67.806 + 68.433 + 65.772 = $251.2 Mil.
Gross Profit was 36.718 + 47.385 + 50.704 + 49.215 = $184.0 Mil.
Total Current Assets was $102.4 Mil.
Total Assets was $1,931.8 Mil.
Property, Plant and Equipment(Net PPE) was $1.6 Mil.
Depreciation, Depletion and Amortization(DDA) was $71.1 Mil.
Selling, General & Admin. Expense(SGA) was $16.3 Mil.
Total Current Liabilities was $98.0 Mil.
Long-Term Debt was $1,017.6 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)|
|=||(19.262 / 265.516)||/||(7.013 / 251.225)|
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)|
|=||(51.838 / 251.225)||/||(37.804 / 265.516)|
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 - (73.199 + 1.464) / 2024.673)||/||(1 - (102.417 + 1.641) / 1931.767)|
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))|
|=||(71.099 / (71.099 + 1.641))||/||(73.324 / (73.324 + 1.464))|
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)|
|=||(15.93 / 265.516)||/||(16.301 / 251.225)|
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)|
|=||((835.607 + 452.818) / 2024.673)||/||((1017.574 + 98.017) / 1931.767)|
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|
|=||(28.778 - 9.554||-||115.576)||/||2024.673|
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 -1.20 signals that the company is likely to 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