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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.
Lamar Advertising Co has a M-score of -2.90 suggests that the company is not a 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 * 0.9745||+||0.528 * 0.9975||+||0.404 * 1.0077||+||0.892 * 1.0528||+||0.115 * 0.9636|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9755||+||4.679 * -0.0978||-||0.327 * 0.9486|
|This Year (Mar14) TTM:||Last Year (Mar13) TTM:|
|Accounts Receivable was $162 Mil.|
Revenue was 284.933 + 320.352 + 323.184 + 327.744 = $1,256 Mil.
Gross Profit was 173.425 + 210.39 + 213.544 + 217.021 = $814 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.
Net Income was -4.837 + 10.186 + 18.34 + 23.122 = $47 Mil.
Non Operating Income was -9.245 + -14.345 + 0 + 0 = $-24 Mil.
Cash Flow from Operations was 62.584 + 100.021 + 142.73 + 100.233 = $406 Mil.
|Accounts Receivable was $158 Mil.
Revenue was 276.605 + 305.505 + 306.286 + 304.872 = $1,193 Mil.
Gross Profit was 170.086 + 199.306 + 202.441 + 199.801 = $772 Mil.
Total Current Assets was $336 Mil.
Total Assets was $3,511 Mil.
Property, Plant and Equipment(Net PPE) was $1,164 Mil.
Depreciation, Depletion and Amortization(DDA) was $298 Mil.
Selling, General & Admin. Expense(SGA) was $277 Mil.
Total Current Liabilities was $199 Mil.
Long-Term Debt was $2,122 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)|
|=||(162.26 / 1256.213)||/||(158.168 / 1193.268)|
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)|
|=||(210.39 / 1193.268)||/||(173.425 / 1256.213)|
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 - (343.117 + 1105.505) / 3426.578)||/||(1 - (335.703 + 1163.923) / 3510.658)|
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))|
|=||(297.611 / (297.611 + 1163.923))||/||(296.204 / (296.204 + 1105.505))|
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)|
|=||(284.011 / 1256.213)||/||(276.557 / 1193.268)|
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)|
|=||((1945.985 + 202.614) / 3426.578)||/||((2121.557 + 198.994) / 3510.658)|
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|
|=||(46.811 - -23.59||-||405.568)||/||3426.578|
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 -2.90 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