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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.
Invesco Ltd has a M-score of -2.16 signals that the company is a manipulator.
During the past 13 years, the highest Beneish M-Score of Invesco Ltd was -1.73. The lowest was -3.00. 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 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 * 1.2662||+||0.528 * 1||+||0.404 * 1.0194||+||0.892 * 1.1558||+||0.115 * 1.0432|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9797||+||4.679 * -0.0142||-||0.327 * 1.0426|
|This Year (Mar14) TTM:||Last Year (Mar13) TTM:|
|Accounts Receivable was $2,225 Mil.|
Revenue was 1269.5 + 1225.1 + 1171.8 + 1135.5 = $4,802 Mil.
Gross Profit was 1269.5 + 1225.1 + 1171.8 + 1135.5 = $4,802 Mil.
Total Current Assets was $5,128 Mil.
Total Assets was $20,346 Mil.
Property, Plant and Equipment(Net PPE) was $342 Mil.
Depreciation, Depletion and Amortization(DDA) was $90 Mil.
Selling, General & Admin. Expense(SGA) was $3,704 Mil.
Total Current Liabilities was $3,976 Mil.
Long-Term Debt was $6,351 Mil.
Net Income was 187.8 + 287.4 + 228.1 + 202.6 = $906 Mil.
Non Operating Income was 51.3 + 41.3 + 51.2 + 5.7 = $150 Mil.
Cash Flow from Operations was -219.2 + 190.3 + 334.3 + 740.2 = $1,046 Mil.
|Accounts Receivable was $1,520 Mil.
Revenue was 1112.2 + 1046.7 + 1013.9 + 981.8 = $4,155 Mil.
Gross Profit was 1112.2 + 1046.7 + 1013.9 + 981.8 = $4,155 Mil.
Total Current Assets was $4,904 Mil.
Total Assets was $18,535 Mil.
Property, Plant and Equipment(Net PPE) was $337 Mil.
Depreciation, Depletion and Amortization(DDA) was $93 Mil.
Selling, General & Admin. Expense(SGA) was $3,271 Mil.
Total Current Liabilities was $3,288 Mil.
Long-Term Debt was $5,736 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)|
|=||(2225 / 4801.9)||/||(1520.4 / 4154.6)|
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)|
|=||(1225.1 / 4154.6)||/||(1269.5 / 4801.9)|
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 - (5128.2 + 342.4) / 20346.3)||/||(1 - (4903.5 + 337.2) / 18534.5)|
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))|
|=||(93 / (93 + 337.2))||/||(89.5 / (89.5 + 342.4))|
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)|
|=||(3704.4 / 4801.9)||/||(3271.4 / 4154.6)|
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)|
|=||((6351.4 + 3975.7) / 20346.3)||/||((5735.9 + 3287.6) / 18534.5)|
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|
|=||(905.9 - 149.5||-||1045.6)||/||20346.3|
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 -2.16 signals that the company is likely to 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