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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 -2.81. 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 * 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|
* 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
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)|
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)|
|=||(5122.9 / 5122.9)||/||(4734.4 / 4734.4)|
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 - (12529.9 + 464.7) / 25734.3)||/||(1 - (4622.9 + 426.9) / 25073.2)|
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))|
|=||(93.6 / (93.6 + 426.9))||/||(101.2 / (101.2 + 464.7))|
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)|
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)|
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|
|=||(854.2 - 111.4||-||129.3)||/||25734.3|
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 -2.61 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