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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 -2.28.
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 * 0.5343||+||0.528 * 1.0284||+||0.404 * 0.9963||+||0.892 * 1.0675||+||0.115 * 0.996|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0562||+||4.679 * -0.0204||-||0.327 * 0.9532|
|This Year (Jul16) TTM:||Last Year (Jul15) TTM:|
|Accounts Receivable was $11.0 Mil.|
Revenue was 49.611 + 29.322 + 55.772 + 52.27 = $187.0 Mil.
Gross Profit was 33.554 + 13.218 + 40.767 + 37.672 = $125.2 Mil.
Total Current Assets was $67.4 Mil.
Total Assets was $1,691.5 Mil.
Property, Plant and Equipment(Net PPE) was $1.0 Mil.
Depreciation, Depletion and Amortization(DDA) was $61.4 Mil.
Selling, General & Admin. Expense(SGA) was $10.3 Mil.
Total Current Liabilities was $135.5 Mil.
Long-Term Debt was $890.6 Mil.
Net Income was -21.643 + 11.003 + 39.797 + 16.666 = $45.8 Mil.
Non Operating Income was 9.431 + 11.824 + 1.581 + -0.006 = $22.8 Mil.
Cash Flow from Operations was 15.755 + 19.554 + 12.621 + 9.536 = $57.5 Mil.
|Accounts Receivable was $19.3 Mil.
Revenue was 45.045 + 25.979 + 52.939 + 51.189 = $175.2 Mil.
Gross Profit was 31.557 + 11.024 + 39.495 + 38.549 = $120.6 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 $9.2 Mil.
Total Current Liabilities was $452.8 Mil.
Long-Term Debt was $835.6 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)|
|=||(10.986 / 186.975)||/||(19.262 / 175.152)|
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)|
|=||(120.625 / 175.152)||/||(125.211 / 186.975)|
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 - (67.404 + 0.977) / 1691.543)||/||(1 - (73.199 + 1.464) / 2024.673)|
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))|
|=||(73.324 / (73.324 + 1.464))||/||(61.413 / (61.413 + 0.977))|
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)|
|=||(10.319 / 186.975)||/||(9.152 / 175.152)|
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)|
|=||((890.563 + 135.492) / 1691.543)||/||((835.607 + 452.818) / 2024.673)|
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|
|=||(45.823 - 22.83||-||57.466)||/||1691.543|
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 -2.93 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