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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
0.00 (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 -2.82 suggests that the company is not a manipulator.

During the past 13 years, the highest Beneish M-Score of Invesco Ltd was 0.00. The lowest was -2.86. And the median was -2.51.


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 * 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 * -0.009-0.327 * 1.0397
=-2.82

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

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 + -68.5 = $6 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

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)
=(575.2 / 4779.4) / (664.8 / 5159.9)
=0.12034983 / 0.12883971
=0.9341

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)
=(5159.9 / 5159.9) / (4779.4 / 4779.4)
=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 - (11555.6 + 444.6) / 24137.7) / (1 - (4887.9 + 415.9) / 24962.2)
=0.5028441 / 0.78752674
=0.6385

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
=4779.4 / 5159.9
=0.9263

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))
=0.17887463 / 0.18436984
=0.9702

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)
=0.75189354 / 0.72809551
=1.0327

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)
=0.63623709 / 0.61194927
=1.0397

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
=(829.6 - 6.1 - 1040) / 24137.7
=-0.009

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 -2.82 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 0.86340.62111.5221.51940.78481.00310.91391.14140.9968
GMI 111111111
AQI 0.97221.1120.9431.12091.01041.03230.82321.14791.0421
SGI 1.19470.85270.79431.32751.14181.01711.14671.10820.9953
DEPI 0.96561.06010.95220.99290.961.27721.06161.10771.0105
SGAI 0.98561.13621.05391.01860.9371.01730.95810.99090.9773
LVGI 1.07090.79890.91811.83110.96680.9291.12730.99991.2064
TATA -0.03960.00070.0029-0.0041-0.0091-0.00470.003-0.0155-0.0037
M-score -2.65-2.86-2.18-1.96-2.57-2.42-2.51-2.25-2.55

Invesco Ltd Quarterly Data

Sep14Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16Dec16
DSRI 1.06051.14140.83640.951.00890.99681.05461.17440.9341
GMI 111111111
AQI 1.13121.14790.86531.03861.02141.04211.25210.64510.6385
SGI 1.14091.10821.07651.04861.01260.99530.96340.93340.9263
DEPI 1.06021.10771.12561.12891.09831.01051.01010.97360.9702
SGAI 0.98870.99090.95250.96360.95780.97731.00711.01571.0327
LVGI 1.07880.99991.12441.11761.17491.20641.0621.11011.0397
TATA -0.0188-0.0155-0.0192-0.00540.01-0.0037-0.00410.0049-0.009
M-score -2.35-2.25-2.72-2.51-2.44-2.55-2.40-2.54-2.82
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