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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 Lamar Advertising Co was -1.38. The lowest was -3.40. And the median was -2.84.
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 Lamar Advertising Co 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 * 0.9985||+||0.528 * 0.9946||+||0.404 * 1.0139||+||0.892 * 1.0402||+||0.115 * 1.1711|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0206||+||4.679 * -0.0372||-||0.327 * 1.0189|
|This Year (Mar15) TTM:||Last Year (Mar14) TTM:|
|Accounts Receivable was $169 Mil.|
Revenue was 302.477 + 336.696 + 334.998 + 330.433 = $1,305 Mil.
Gross Profit was 189.245 + 221.6 + 222.61 + 216.156 = $850 Mil.
Total Current Assets was $310 Mil.
Total Assets was $3,355 Mil.
Property, Plant and Equipment(Net PPE) was $1,082 Mil.
Depreciation, Depletion and Amortization(DDA) was $238 Mil.
Selling, General & Admin. Expense(SGA) was $302 Mil.
Total Current Liabilities was $206 Mil.
Long-Term Debt was $1,938 Mil.
Net Income was 40.716 + 207.883 + 35.05 + 15.422 = $299 Mil.
Non Operating Income was 0 + 0 + 0 + -20.847 = $-21 Mil.
Cash Flow from Operations was 54.731 + 149.325 + 129.772 + 110.848 = $445 Mil.
|Accounts Receivable was $162 Mil.
Revenue was 284.933 + 320.352 + 321.141 + 327.744 = $1,254 Mil.
Gross Profit was 173.425 + 210.39 + 211.501 + 217.021 = $812 Mil.
Total Current Assets was $343 Mil.
Total Assets was $3,427 Mil.
Property, Plant and Equipment(Net PPE) was $1,106 Mil.
Depreciation, Depletion and Amortization(DDA) was $296 Mil.
Selling, General & Admin. Expense(SGA) was $284 Mil.
Total Current Liabilities was $203 Mil.
Long-Term Debt was $1,946 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)|
|=||(168.527 / 1304.604)||/||(162.26 / 1254.17)|
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)|
|=||(221.6 / 1254.17)||/||(189.245 / 1304.604)|
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 - (309.852 + 1081.666) / 3355.224)||/||(1 - (343.117 + 1105.505) / 3426.578)|
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))|
|=||(296.204 / (296.204 + 1105.505))||/||(238.139 / (238.139 + 1081.666))|
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)|
|=||(301.514 / 1304.604)||/||(284.011 / 1254.17)|
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)|
|=||((1937.515 + 206.144) / 3355.224)||/||((1945.985 + 202.614) / 3426.578)|
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|
|=||(299.071 - -20.847||-||444.676)||/||3355.224|
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.
Lamar Advertising Co 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
Lamar Advertising Co Annual Data
Lamar Advertising Co Quarterly Data