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GuruFocus has detected 2 Warning Signs with IBI Group Inc $TSX:IBG.
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IBI Group Inc (TSX:IBG)
Beneish M-Score
-2.30 (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.

IBI Group Inc has a M-score of -2.30 suggests that the company is not a manipulator.

TSX:IBG' s Beneish M-Score Range Over the Past 10 Years
Min: -6.94   Max: -1.65
Current: -2.3

-6.94
-1.65

During the past 13 years, the highest Beneish M-Score of IBI Group Inc was -1.65. The lowest was -6.94. And the median was -2.34.


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 IBI 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 * 0.9567+0.528 * 1+0.404 * 1.2226+0.892 * 1.055+0.115 * 1.0002
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9916+4.679 * 0.0029-0.327 * 0.8049
=-2.30

* 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 C$105.2 Mil.
Revenue was 91.366 + 86.841 + 88.211 + 90.443 = C$356.9 Mil.
Gross Profit was 91.366 + 86.841 + 88.211 + 90.443 = C$356.9 Mil.
Total Current Assets was C$213.6 Mil.
Total Assets was C$260.5 Mil.
Property, Plant and Equipment(Net PPE) was C$15.2 Mil.
Depreciation, Depletion and Amortization(DDA) was C$5.3 Mil.
Selling, General & Admin. Expense(SGA) was C$272.4 Mil.
Total Current Liabilities was C$100.1 Mil.
Long-Term Debt was C$119.1 Mil.
Net Income was 3.261 + 6.09 + -3.777 + 3.567 = C$9.1 Mil.
Non Operating Income was -1.25 + -16.783 + -0.452 + -0.367 = C$-18.9 Mil.
Cash Flow from Operations was 2.198 + 17.249 + 13.895 + -6.099 = C$27.2 Mil.
Accounts Receivable was C$104.2 Mil.
Revenue was 88.645 + 84.913 + 83.819 + 80.879 = C$338.3 Mil.
Gross Profit was 88.645 + 84.913 + 83.819 + 80.879 = C$338.3 Mil.
Total Current Assets was C$210.0 Mil.
Total Assets was C$249.3 Mil.
Property, Plant and Equipment(Net PPE) was C$14.5 Mil.
Depreciation, Depletion and Amortization(DDA) was C$5.1 Mil.
Selling, General & Admin. Expense(SGA) was C$260.4 Mil.
Total Current Liabilities was C$105.0 Mil.
Long-Term Debt was C$155.6 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)
=(105.196 / 356.861) / (104.22 / 338.256)
=0.29478144 / 0.30810983
=0.9567

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)
=(338.256 / 338.256) / (356.861 / 356.861)
=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 - (213.627 + 15.194) / 260.527) / (1 - (210.027 + 14.498) / 249.346)
=0.12169948 / 0.09954441
=1.2226

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
=356.861 / 338.256
=1.055

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))
=(5.09 / (5.09 + 14.498)) / (5.333 / (5.333 + 15.194))
=0.25985297 / 0.25980416
=1.0002

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)
=(272.396 / 356.861) / (260.381 / 338.256)
=0.76331121 / 0.76977496
=0.9916

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)
=((119.083 + 100.054) / 260.527) / ((155.593 + 104.98) / 249.346)
=0.84112971 / 1.04502579
=0.8049

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
=(9.141 - -18.852 - 27.243) / 260.527
=0.0029

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.

IBI Group Inc has a M-score of -2.30 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.

IBI Group Inc Annual Data

Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15Dec16
DSRI 1.13421.2460.97651.01660.88561.03790.89530.9470.95750.8974
GMI 0.98351.016811111111
AQI 0.80911.05320.92520.99310.9590.96240.18841.3660.84941.2256
SGI 1.11561.4131.14281.05721.14851.01630.82331.07271.09661.0827
DEPI 1.32550.8040.85430.97831.05210.93440.58565.14180.88020.9651
SGAI 1.0070.89740.96391.02060.99991.07451.14160.89280.96660.9901
LVGI 0.86451.67171.08641.1171.01870.97011.91271.00580.92450.847
TATA 0.01430.03710.02760.1040.0398-0.0051-0.7497-0.1704-0.0527-0.0382
M-score -2.19-1.91-2.31-1.97-2.28-2.48-6.94-2.62-2.72-2.54

IBI Group Inc Quarterly Data

Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16Dec16Mar17
DSRI 0.9470.95880.82320.99610.95750.84120.88810.87030.89740.9567
GMI 1111111111
AQI 1.3661.30171.35411.46940.84940.96681.10181.28161.22561.2226
SGI 1.07271.13261.19761.0741.09661.11891.1331.11031.08271.055
DEPI 5.14185.365.73675.2070.88020.82860.80690.80290.96511.0002
SGAI 0.89280.88940.89020.97190.96660.95920.95430.97850.99010.9916
LVGI 1.00580.98430.97250.97530.92450.97360.94440.93490.8470.8049
TATA -0.1704-0.1705-0.1507-0.0916-0.0527-0.0795-0.0425-0.0758-0.03820.0029
M-score -2.62-2.55-2.46-2.16-2.72-2.91-2.62-2.74-2.54-2.30
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