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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 -2.41.
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 * 0.44||+||0.528 * 0.9469||+||0.404 * 0.9988||+||0.892 * 1.2059||+||0.115 * 0.9944|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.3326||+||4.679 * -0.0454||-||0.327 * 1.0549|
|This Year (Jan17) TTM:||Last Year (Jan16) TTM:|
|Accounts Receivable was $12.0 Mil.|
Revenue was 51.174 + 50.609 + 49.611 + 48.523 = $199.9 Mil.
Gross Profit was 34.14 + 34.795 + 33.554 + 33.616 = $136.1 Mil.
Total Current Assets was $72.8 Mil.
Total Assets was $1,609.1 Mil.
Property, Plant and Equipment(Net PPE) was $0.9 Mil.
Depreciation, Depletion and Amortization(DDA) was $58.7 Mil.
Selling, General & Admin. Expense(SGA) was $11.4 Mil.
Total Current Liabilities was $252.6 Mil.
Long-Term Debt was $727.9 Mil.
Net Income was 23.11 + 11.6 + -21.643 + 11.003 = $24.1 Mil.
Non Operating Income was 0.688 + -0.066 + 9.431 + 11.824 = $21.9 Mil.
Cash Flow from Operations was 20.311 + 19.633 + 15.755 + 19.554 = $75.3 Mil.
|Accounts Receivable was $22.7 Mil.
Revenue was 48.406 + 46.346 + 45.045 + 25.979 = $165.8 Mil.
Gross Profit was 32.994 + 31.294 + 31.557 + 11.024 = $106.9 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 $7.1 Mil.
Total Current Liabilities was $77.7 Mil.
Long-Term Debt was $901.9 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)|
|=||(12.025 / 199.917)||/||(22.662 / 165.776)|
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)|
|=||(106.869 / 165.776)||/||(136.105 / 199.917)|
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 - (72.776 + 0.915) / 1609.089)||/||(1 - (74.256 + 1.442) / 1695.809)|
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))|
|=||(67.731 / (67.731 + 1.442))||/||(58.679 / (58.679 + 0.915))|
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)|
|=||(11.389 / 199.917)||/||(7.087 / 165.776)|
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)|
|=||((727.948 + 252.642) / 1609.089)||/||((901.909 + 77.727) / 1695.809)|
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|
|=||(24.07 - 21.877||-||75.253)||/||1609.089|
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 -3.13 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