Switch to:
GuruFocus has detected 4 Warning Signs with Investment Technology Group Inc $ITG.
More than 500,000 people have already joined GuruFocus to track the stocks they follow and exchange investment ideas.
Investment Technology Group Inc (NYSE:ITG)
Beneish M-Score
-2.06 (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.

Investment Technology Group Inc has a M-score of -2.06 signals that the company is a manipulator.

ITG' s Beneish M-Score Range Over the Past 10 Years
Min: -4.09   Max: -1.91
Current: -2.06

-4.09
-1.91

During the past 13 years, the highest Beneish M-Score of Investment Technology Group Inc was -1.91. The lowest was -4.09. And the median was -2.76.


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 Investment Technology Group Inc 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 * 1.4995+0.528 * 1+0.404 * 2.2605+0.892 * 0.7389+0.115 * 1.0471
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.3235+4.679 * -0.0815-0.327 * 0.6505
=-2.06

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

This Year (Dec16) TTM:Last Year (Dec15) TTM:
Accounts Receivable was $54.5 Mil.
Revenue was 119.589 + 104.185 + 120.61 + 124.668 = $469.1 Mil.
Gross Profit was 119.589 + 104.185 + 120.61 + 124.668 = $469.1 Mil.
Total Current Assets was $590.2 Mil.
Total Assets was $775.3 Mil.
Property, Plant and Equipment(Net PPE) was $59.3 Mil.
Depreciation, Depletion and Amortization(DDA) was $43.5 Mil.
Selling, General & Admin. Expense(SGA) was $500.5 Mil.
Total Current Liabilities was $363.8 Mil.
Long-Term Debt was $6.4 Mil.
Net Income was 5.716 + -23.911 + -5.217 + -2.506 = $-25.9 Mil.
Non Operating Income was 0.549 + 0.561 + 0.572 + 0.535 = $2.2 Mil.
Cash Flow from Operations was 109.768 + 80.08 + -122.157 + -32.609 = $35.1 Mil.
Accounts Receivable was $49.2 Mil.
Revenue was 224.173 + 120.409 + 140.494 + 149.727 = $634.8 Mil.
Gross Profit was 224.173 + 120.409 + 140.494 + 149.727 = $634.8 Mil.
Total Current Assets was $1,530.9 Mil.
Total Assets was $1,709.0 Mil.
Property, Plant and Equipment(Net PPE) was $55.5 Mil.
Depreciation, Depletion and Amortization(DDA) was $44.2 Mil.
Selling, General & Admin. Expense(SGA) was $511.7 Mil.
Total Current Liabilities was $1,241.6 Mil.
Long-Term Debt was $12.6 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)
=(54.486 / 469.052) / (49.176 / 634.803)
=0.11616196 / 0.07746655
=1.4995

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)
=(634.803 / 634.803) / (469.052 / 469.052)
=1 / 1
=1

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 - (590.223 + 59.333) / 775.285) / (1 - (1530.916 + 55.496) / 1709.022)
=0.16217133 / 0.07174279
=2.2605

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
=469.052 / 634.803
=0.7389

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))
=(44.151 / (44.151 + 55.496)) / (43.523 / (43.523 + 59.333))
=0.44307405 / 0.42314498
=1.0471

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)
=(500.455 / 469.052) / (511.748 / 634.803)
=1.06694993 / 0.80615246
=1.3235

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)
=((6.367 + 363.754) / 775.285) / ((12.567 + 1241.634) / 1709.022)
=0.47739992 / 0.7338706
=0.6505

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
=(-25.918 - 2.217 - 35.082) / 775.285
=-0.0815

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.

Investment Technology Group Inc has a M-score of -2.06 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 local exchange's currency.

Investment Technology Group Inc Annual Data

Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15Dec16
DSRI 1.48460.42511.19792.25390.77761.31240.12631.40850.4018
GMI 011111111
AQI 0.25411.27421.0230.7260.79170.34691.19991.3410.6917
SGI 1.21941.04380.82970.90161.00220.88181.05231.05471.134
DEPI 0.89380.83190.88910.96971.05961.14171.13230.99411.0161
SGAI 6.76321.00951.13741.06771.02021.06470.94360.96260.9163
LVGI 6.04160.80150.92061.33781.05431.17570.8960.94921.0608
TATA 0.1-0.1574-0.0171-0.0554-0.11430.0042-0.0109-0.06960.024
M-score -4.85-3.55-2.53-1.91-3.32-2.59-3.15-2.22-2.93

Investment Technology Group Inc Quarterly Data

Sep14Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16Dec16
DSRI 1.40031.40850.04140.07370.04520.40188.29223.53794.30741.4995
GMI 1111111111
AQI 0.87231.3412.17712.49722.37240.69170.84061.31191.67462.2605
SGI 1.04291.05471.06631.07181.0311.1341.06611.02771.02510.7389
DEPI 0.95910.99411.00251.00971.00961.01611.02111.00181.01581.0471
SGAI 0.95410.96260.97211.03521.05230.91630.96010.90010.93891.3235
LVGI 1.02990.94920.85170.86460.86251.06080.98650.79580.72760.6505
TATA -0.0014-0.06960.002-0.0807-0.03240.024-0.00090.15750.0653-0.0815
M-score -2.14-2.22-2.76-3.00-2.89-2.934.230.831.26-2.06
Get WordPress Plugins for easy affiliate links on Stock Tickers and Guru Names | Earn affiliate commissions by embedding GuruFocus Charts
GuruFocus Affiliate Program: Earn up to $400 per referral. ( Learn More)
FEEDBACK