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GuruFocus has detected 7 Warning Signs with Investment Technology Group Inc $ITG.
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Investment Technology Group Inc (NYSE:ITG)
Beneish M-Score
-3.17 (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.

Investment Technology Group Inc has a M-score of -3.17 suggests that the company is not a manipulator.

ITG' s Beneish M-Score Range Over the Past 10 Years
Min: -9.52   Max: 4.23
Current: -3.17

-9.52
4.23

During the past 13 years, the highest Beneish M-Score of Investment Technology Group Inc was 4.23. The lowest was -9.52. And the median was -2.72.


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 Investment Technology Group Inc 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 * 0.128+0.528 * 1+0.404 * 2.0364+0.892 * 0.763+0.115 * 1.0343
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.2507+4.679 * -0.0292-0.327 * 0.7508
=-3.17

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

This Year (Mar17) TTM:Last Year (Mar16) TTM:
Accounts Receivable was $95.1 Mil.
Revenue was 120.835 + 119.589 + 104.185 + 120.61 = $465.2 Mil.
Gross Profit was 120.835 + 119.589 + 104.185 + 120.61 = $465.2 Mil.
Total Current Assets was $693.0 Mil.
Total Assets was $884.7 Mil.
Property, Plant and Equipment(Net PPE) was $58.1 Mil.
Depreciation, Depletion and Amortization(DDA) was $44.0 Mil.
Selling, General & Admin. Expense(SGA) was $489.2 Mil.
Total Current Liabilities was $476.6 Mil.
Long-Term Debt was $4.8 Mil.
Net Income was 5.302 + 5.716 + -23.911 + -5.217 = $-18.1 Mil.
Non Operating Income was 0.52 + 0.549 + 0.561 + 0.572 = $2.2 Mil.
Cash Flow from Operations was -62.141 + 109.768 + 80.08 + -122.157 = $5.6 Mil.
Accounts Receivable was $974.4 Mil.
Revenue was 124.668 + 224.173 + 120.409 + 140.494 = $609.7 Mil.
Gross Profit was 124.668 + 224.173 + 120.409 + 140.494 = $609.7 Mil.
Total Current Assets was $1,442.9 Mil.
Total Assets was $1,617.2 Mil.
Property, Plant and Equipment(Net PPE) was $54.5 Mil.
Depreciation, Depletion and Amortization(DDA) was $43.8 Mil.
Selling, General & Admin. Expense(SGA) was $512.6 Mil.
Total Current Liabilities was $1,161.1 Mil.
Long-Term Debt was $11.1 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)
=(95.131 / 465.219) / (974.433 / 609.744)
=0.20448649 / 1.59810183
=0.128

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)
=(609.744 / 609.744) / (465.219 / 465.219)
=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 - (692.993 + 58.144) / 884.656) / (1 - (1442.851 + 54.511) / 1617.223)
=0.15092759 / 0.07411532
=2.0364

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
=465.219 / 609.744
=0.763

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))
=(43.771 / (43.771 + 54.511)) / (43.969 / (43.969 + 58.144))
=0.44536131 / 0.4305916
=1.0343

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)
=(489.188 / 465.219) / (512.637 / 609.744)
=1.05152197 / 0.84074136
=1.2507

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)
=((4.802 + 476.63) / 884.656) / ((11.102 + 1161.132) / 1617.223)
=0.54420249 / 0.72484376
=0.7508

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
=(-18.11 - 2.202 - 5.55) / 884.656
=-0.0292

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.

Investment Technology Group Inc has a M-score of -3.17 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.

Investment Technology Group Inc Annual Data

Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15Dec16
DSRI 1.48460.42511.19792.25390.77761.31240.12631.40850.40181.4995
GMI 1111111111
AQI 0.25411.27421.0230.7260.79170.34691.19991.3410.69172.2605
SGI 1.21941.04380.82970.90161.00220.88181.05231.05471.1340.7389
DEPI 0.89380.83190.88910.96971.05961.14171.13230.99411.01611.0471
SGAI 5.43781.25551.13741.06751.02041.06470.94360.96260.91631.3235
LVGI 6.04160.80150.92061.33781.05431.17570.8960.94921.06080.6505
TATA 0.1013-0.1574-0.0171-0.0554-0.11430.0042-0.0105-0.06960.024-0.0815
M-score -4.09-3.59-2.53-1.91-3.32-2.59-3.15-2.22-2.93-2.06

Investment Technology Group Inc Quarterly Data

Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16Dec16Mar17
DSRI 1.40850.04140.07370.04520.40188.29223.53794.30741.49950.128
GMI 1111111111
AQI 1.3412.17712.49722.37240.69170.84061.31191.67462.26052.0364
SGI 1.05471.06631.07181.0311.1341.06611.02771.02510.73890.763
DEPI 0.99411.00251.00971.00961.01611.02111.00181.01581.04711.0343
SGAI 0.96260.97211.03521.05230.91630.96010.90010.93891.32351.2507
LVGI 0.94920.85170.86460.86251.06080.98650.79580.72760.65050.7508
TATA -0.06960.002-0.0807-0.03240.024-0.00090.15750.0653-0.0815-0.0292
M-score -2.22-2.76-3.00-2.89-2.934.230.831.26-2.06-3.17
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