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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 * 0.9476||+||0.528 * 0.9878||+||0.404 * 1.0116||+||0.892 * 1.049||+||0.115 * 1.2788|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0327||+||4.679 * -0.0369||-||0.327 * 1.005|
|This Year (Jun15) TTM:||Last Year (Jun14) TTM:|
|Accounts Receivable was $183 Mil.|
Revenue was 344.249 + 302.477 + 336.696 + 334.998 = $1,318 Mil.
Gross Profit was 228.298 + 189.245 + 221.6 + 222.61 = $862 Mil.
Total Current Assets was $317 Mil.
Total Assets was $3,370 Mil.
Property, Plant and Equipment(Net PPE) was $1,086 Mil.
Depreciation, Depletion and Amortization(DDA) was $216 Mil.
Selling, General & Admin. Expense(SGA) was $309 Mil.
Total Current Liabilities was $231 Mil.
Long-Term Debt was $1,923 Mil.
Net Income was 59.36 + 40.716 + 207.883 + 35.05 = $343 Mil.
Non Operating Income was 0 + 0 + 0 + 0 = $0 Mil.
Cash Flow from Operations was 133.486 + 54.731 + 149.325 + 129.772 = $467 Mil.
|Accounts Receivable was $184 Mil.
Revenue was 330.433 + 284.933 + 320.352 + 321.141 = $1,257 Mil.
Gross Profit was 216.156 + 173.425 + 210.39 + 211.501 = $811 Mil.
Total Current Assets was $332 Mil.
Total Assets was $3,376 Mil.
Property, Plant and Equipment(Net PPE) was $1,096 Mil.
Depreciation, Depletion and Amortization(DDA) was $295 Mil.
Selling, General & Admin. Expense(SGA) was $285 Mil.
Total Current Liabilities was $235 Mil.
Long-Term Debt was $1,912 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)|
|=||(183.31 / 1318.42)||/||(184.405 / 1256.859)|
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)|
|=||(189.245 / 1256.859)||/||(228.298 / 1318.42)|
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 - (316.696 + 1086.325) / 3369.706)||/||(1 - (332.161 + 1096.242) / 3376.47)|
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))|
|=||(294.845 / (294.845 + 1096.242))||/||(215.815 / (215.815 + 1086.325))|
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)|
|=||(308.843 / 1318.42)||/||(285.103 / 1256.859)|
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)|
|=||((1922.887 + 230.939) / 3369.706)||/||((1912.231 + 235.242) / 3376.47)|
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|
|=||(343.009 - 0||-||467.314)||/||3369.706|
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 -2.63 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