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GuruFocus has detected 4 Warning Signs with Invesco Ltd $IVZ.
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Invesco Ltd (NYSE:IVZ)
Beneish M-Score
-2.61 (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.

Invesco Ltd has a M-score of -2.61 suggests that the company is not a manipulator.

IVZ' s Beneish M-Score Range Over the Past 10 Years
Min: -2.81   Max: -0.54
Current: -2.61

-2.81
-0.54

During the past 13 years, the highest Beneish M-Score of Invesco Ltd was -0.54. The lowest was -2.81. And the median was -2.46.


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 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 * 1.0031+0.528 * 1+0.404 * 0.6199+0.892 * 0.9242+0.115 * 1.0056
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0227+4.679 * 0.0238-0.327 * 1.0495
=-2.61

* 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 $650 Mil.
Revenue was 1194.7 + 1201.6 + 1189.4 + 1148.7 = $4,734 Mil.
Gross Profit was 1194.7 + 1201.6 + 1189.4 + 1148.7 = $4,734 Mil.
Total Current Assets was $12,530 Mil.
Total Assets was $25,734 Mil.
Property, Plant and Equipment(Net PPE) was $465 Mil.
Depreciation, Depletion and Amortization(DDA) was $101 Mil.
Selling, General & Admin. Expense(SGA) was $3,558 Mil.
Total Current Liabilities was $10,350 Mil.
Long-Term Debt was $6,506 Mil.
Net Income was 226.5 + 241.2 + 225.5 + 161 = $854 Mil.
Non Operating Income was 36.8 + 60.7 + 38.3 + -24.4 = $111 Mil.
Cash Flow from Operations was -412.8 + 367.5 + 243.4 + -68.8 = $129 Mil.
Accounts Receivable was $702 Mil.
Revenue was 1239.7 + 1273.5 + 1318.1 + 1291.6 = $5,123 Mil.
Gross Profit was 1239.7 + 1273.5 + 1318.1 + 1291.6 = $5,123 Mil.
Total Current Assets was $4,623 Mil.
Total Assets was $25,073 Mil.
Property, Plant and Equipment(Net PPE) was $427 Mil.
Depreciation, Depletion and Amortization(DDA) was $94 Mil.
Selling, General & Admin. Expense(SGA) was $3,765 Mil.
Total Current Liabilities was $8,138 Mil.
Long-Term Debt was $7,510 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)
=(650.4 / 4734.4) / (701.6 / 5122.9)
=0.13737749 / 0.13695368
=1.0031

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)
=(5122.9 / 5122.9) / (4734.4 / 4734.4)
=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 - (12529.9 + 464.7) / 25734.3) / (1 - (4622.9 + 426.9) / 25073.2)
=0.49504747 / 0.79859771
=0.6199

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
=4734.4 / 5122.9
=0.9242

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))
=(93.6 / (93.6 + 426.9)) / (101.2 / (101.2 + 464.7))
=0.17982709 / 0.17883018
=1.0056

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)
=(3558 / 4734.4) / (3764.5 / 5122.9)
=0.75152078 / 0.73483769
=1.0227

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)
=((6505.5 + 10350.2) / 25734.3) / ((7509.8 + 8137.8) / 25073.2)
=0.65498964 / 0.6240767
=1.0495

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
=(854.2 - 111.4 - 129.3) / 25734.3
=0.0238

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 -2.61 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.

Invesco Ltd Annual Data

Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15Dec16
DSRI 0.86340.62111.5221.51940.76380.99960.94251.14140.9968
GMI 111111111
AQI 0.97221.11120.94361.12091.01040.9630.99150.88521.2025
SGI 1.19470.85270.79431.32751.17331.02071.11191.10820.9953
DEPI 0.96561.39520.72350.99290.961.27721.06161.10771.0105
SGAI 0.98561.13621.05391.01860.93941.01390.95890.99090.9773
LVGI 1.07090.79890.91811.83110.96680.90251.10671.07691.1745
TATA -0.03960.00380.0029-0.0041-0.0091-0.00470.003-0.0155-0.0037
M-score -2.65-2.81-2.21-1.96-2.56-2.44-2.44-2.38-2.47

Invesco Ltd Quarterly Data

Sep14Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16Dec16
DSRI 1.07851.14870.83640.951.00890.99681.05461.17440.93411.0031
GMI 1111111111
AQI 1.13120.88520.86531.03861.02141.20251.25210.64510.63850.6199
SGI 1.12191.10121.07651.04861.01260.99530.96340.93340.92630.9242
DEPI 1.06021.10771.12561.12891.09831.01051.01010.97360.97021.0056
SGAI 0.99050.99070.95250.96360.95780.97731.00711.01571.03271.0227
LVGI 1.07881.07691.12441.11761.17491.17451.0621.11011.03971.0495
TATA -0.0188-0.0155-0.0185-0.0040.0121-0.0037-0.00470.0035-0.01110.0238
M-score -2.35-2.38-2.72-2.50-2.43-2.47-2.40-2.55-2.83-2.61
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