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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 Invesco Ltd was -0.54. The lowest was -3.48. 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 Invesco Ltd 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 * 0.9341||+||0.528 * 1||+||0.404 * 0.6385||+||0.892 * 0.9263||+||0.115 * 0.9702|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0327||+||4.679 * -0.0111||-||0.327 * 1.0397|
|This Year (Sep16) TTM:||Last Year (Sep15) TTM:|
|Accounts Receivable was $575 Mil.|
Revenue was 1201.6 + 1189.4 + 1148.7 + 1239.7 = $4,779 Mil.
Gross Profit was 1201.6 + 1189.4 + 1148.7 + 1239.7 = $4,779 Mil.
Total Current Assets was $11,556 Mil.
Total Assets was $24,138 Mil.
Property, Plant and Equipment(Net PPE) was $445 Mil.
Depreciation, Depletion and Amortization(DDA) was $101 Mil.
Selling, General & Admin. Expense(SGA) was $3,594 Mil.
Total Current Liabilities was $9,424 Mil.
Long-Term Debt was $5,933 Mil.
Net Income was 241.2 + 225.5 + 161 + 201.9 = $830 Mil.
Non Operating Income was 60.7 + 38.3 + -24.4 + -16.8 = $58 Mil.
Cash Flow from Operations was 367.5 + 243.4 + -68.8 + 497.9 = $1,040 Mil.
|Accounts Receivable was $665 Mil.
Revenue was 1273.5 + 1318.1 + 1291.6 + 1276.7 = $5,160 Mil.
Gross Profit was 1273.5 + 1318.1 + 1291.6 + 1276.7 = $5,160 Mil.
Total Current Assets was $4,888 Mil.
Total Assets was $24,962 Mil.
Property, Plant and Equipment(Net PPE) was $416 Mil.
Depreciation, Depletion and Amortization(DDA) was $91 Mil.
Selling, General & Admin. Expense(SGA) was $3,757 Mil.
Total Current Liabilities was $7,917 Mil.
Long-Term Debt was $7,359 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)|
|=||(575.2 / 4779.4)||/||(664.8 / 5159.9)|
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)|
|=||(5159.9 / 5159.9)||/||(4779.4 / 4779.4)|
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 - (11555.6 + 444.6) / 24137.7)||/||(1 - (4887.9 + 415.9) / 24962.2)|
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))|
|=||(90.6 / (90.6 + 415.9))||/||(100.5 / (100.5 + 444.6))|
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)|
|=||(3593.6 / 4779.4)||/||(3756.9 / 5159.9)|
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)|
|=||((5933.2 + 9424.1) / 24137.7)||/||((7359 + 7916.6) / 24962.2)|
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|
|=||(829.6 - 57.8||-||1040)||/||24137.7|
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.
Invesco Ltd has a M-score of -2.83 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
Invesco Ltd Annual Data
Invesco Ltd Quarterly Data