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GuruFocus has detected 8 Warning Signs with Investors Real Estate Trust $IRET.
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Investors Real Estate Trust (NYSE:IRET)
Beneish M-Score
-2.74 (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 -2.74 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: -2.74

-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 * 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
=-2.74

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

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

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)
=(17.774 / 185.314) / (20.825 / 170.309)
=0.09591288 / 0.12227774
=0.7844

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)
=(113.37 / 170.309) / (122.334 / 185.314)
=0.6656724 / 0.6601444
=1.0084

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 - (91.07 + 0.928) / 1679.319) / (1 - (79.315 + 1.408) / 1781.953)
=0.94521708 / 0.9546997
=0.9901

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
=185.314 / 170.309
=1.0881

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))
=0.98041888 / 0.98481203
=0.9955

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)
=0.0477244 / 0.04771915
=1.0001

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)
=0.60710205 / 0.60381783
=1.0054

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
=(40.757 - 22.77 - 67.563) / 1679.319
=-0.0295

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.


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 0.56991.43480.904919.55311.00490.9980.97461.02270.37440.4008
SGI 1.14321.11961.08520.96461.01150.97651.08480.66351.08951.0502
DEPI 0.98210.98530.91950.03861.00490.99580.99471.004617.75871.2681
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 -3.17-2.00-2.955.46-2.43-2.450.37-2.30-1.86-2.98

Investors Real Estate Trust Quarterly Data

Jul14Oct14Jan15Apr15Jul15Oct15Jan16Apr16Jul16Oct16
DSRI 0.33550.21260.28560.05762.33194.40992.78560.64790.55180.7844
GMI 1.07911.08411.09070.98771.00211.031.0281.05961.04931.0084
AQI 1.01881.01181.00840.37441.0181.00241.00560.40080.99630.9901
SGI 0.5840.51960.45021.08951.17781.26981.45950.98421.03371.0881
DEPI 1.00581.00580.999217.75870.9970.99760.99861.26810.9960.9955
SGAI 1.43051.34681.44851.07840.69780.61090.55110.76680.95931.0001
LVGI 1.00210.99520.98781.08411.10191.05681.02620.93890.95321.0054
TATA -0.0581-0.0649-0.064-0.0485-0.0476-0.036-0.0102-0.0044-0.0204-0.0295
M-score -3.76-3.94-3.95-1.87-1.290.79-0.39-2.96-2.91-2.74
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