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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 -1.16. The lowest was -3.32. And the median was -2.82.
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 * 0.9825||+||0.528 * 1.0004||+||0.404 * 1.0425||+||0.892 * 1.1085||+||0.115 * 1.0074|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9936||+||4.679 * -0.0564||-||0.327 * 1.0588|
|This Year (Dec16) TTM:||Last Year (Dec15) TTM:|
|Accounts Receivable was $190 Mil.|
Revenue was 386.717 + 387.516 + 387.528 + 338.533 = $1,500 Mil.
Gross Profit was 254.348 + 255.738 + 254.803 + 209.808 = $975 Mil.
Total Current Assets was $316 Mil.
Total Assets was $3,900 Mil.
Property, Plant and Equipment(Net PPE) was $1,183 Mil.
Depreciation, Depletion and Amortization(DDA) was $205 Mil.
Selling, General & Admin. Expense(SGA) was $346 Mil.
Total Current Liabilities was $277 Mil.
Long-Term Debt was $2,315 Mil.
Net Income was 80.525 + 85.061 + 81.909 + 51.314 = $299 Mil.
Non Operating Income was 0 + 0 + -0.056 + -3.142 = $-3 Mil.
Cash Flow from Operations was 183.997 + 126.801 + 159.488 + 51.537 = $522 Mil.
|Accounts Receivable was $174 Mil.
Revenue was 355.969 + 350.701 + 344.249 + 302.477 = $1,353 Mil.
Gross Profit was 233.068 + 229.025 + 228.298 + 189.245 = $880 Mil.
Total Current Assets was $282 Mil.
Total Assets was $3,364 Mil.
Property, Plant and Equipment(Net PPE) was $1,095 Mil.
Depreciation, Depletion and Amortization(DDA) was $191 Mil.
Selling, General & Admin. Expense(SGA) was $314 Mil.
Total Current Liabilities was $237 Mil.
Long-Term Debt was $1,875 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)|
|=||(189.935 / 1500.294)||/||(174.398 / 1353.396)|
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)|
|=||(879.636 / 1353.396)||/||(974.697 / 1500.294)|
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 - (315.835 + 1182.715) / 3900.466)||/||(1 - (281.732 + 1095.137) / 3363.744)|
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))|
|=||(191.433 / (191.433 + 1095.137))||/||(204.958 / (204.958 + 1182.715))|
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)|
|=||(345.789 / 1500.294)||/||(313.941 / 1353.396)|
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)|
|=||((2315.267 + 277.324) / 3900.466)||/||((1874.941 + 236.83) / 3363.744)|
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|
|=||(298.809 - -3.198||-||521.823)||/||3900.466|
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 -2.66 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