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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 -2.87 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 * 0.9724||+||0.528 * 0.9999||+||0.404 * 1.0433||+||0.892 * 1.0349||+||0.115 * 0.9988|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9636||+||4.679 * -0.0899||-||0.327 * 0.9854|
|This Year (Sep14) TTM:||Last Year (Sep13) TTM:|
|Accounts Receivable was $181 Mil.|
Revenue was 334.998 + 330.433 + 284.933 + 320.352 = $1,271 Mil.
Gross Profit was 222.61 + 216.156 + 173.425 + 210.39 = $823 Mil.
Total Current Assets was $315 Mil.
Total Assets was $3,370 Mil.
Property, Plant and Equipment(Net PPE) was $1,095 Mil.
Depreciation, Depletion and Amortization(DDA) was $284 Mil.
Selling, General & Admin. Expense(SGA) was $288 Mil.
Total Current Liabilities was $225 Mil.
Long-Term Debt was $1,925 Mil.
Net Income was 35.05 + 15.422 + -4.837 + 10.186 = $56 Mil.
Non Operating Income was 0 + -20.847 + -9.245 + -14.345 = $-44 Mil.
Cash Flow from Operations was 129.772 + 110.848 + 62.584 + 100.021 = $403 Mil.
|Accounts Receivable was $179 Mil.
Revenue was 321.141 + 327.744 + 276.605 + 302.34 = $1,228 Mil.
Gross Profit was 211.501 + 217.021 + 170.086 + 196.141 = $795 Mil.
Total Current Assets was $462 Mil.
Total Assets was $3,625 Mil.
Property, Plant and Equipment(Net PPE) was $1,143 Mil.
Depreciation, Depletion and Amortization(DDA) was $296 Mil.
Selling, General & Admin. Expense(SGA) was $289 Mil.
Total Current Liabilities was $599 Mil.
Long-Term Debt was $1,749 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)|
|=||(180.584 / 1270.716)||/||(179.434 / 1227.83)|
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)|
|=||(216.156 / 1227.83)||/||(222.61 / 1270.716)|
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 - (314.876 + 1095.363) / 3369.76)||/||(1 - (461.682 + 1143.075) / 3625.422)|
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))|
|=||(296.292 / (296.292 + 1143.075))||/||(284.337 / (284.337 + 1095.363))|
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)|
|=||(287.913 / 1270.716)||/||(288.704 / 1227.83)|
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)|
|=||((1925.476 + 224.8) / 3369.76)||/||((1748.98 + 598.655) / 3625.422)|
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|
|=||(55.821 - -44.437||-||403.225)||/||3369.76|
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 -2.87 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