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GuruFocus has detected 4 Warning Signs with Layne Christensen Co $LAYN.
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Layne Christensen Co (NAS:LAYN)
Beneish M-Score
-3.09 (As of Today)

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.

Layne Christensen Co has a M-score of -3.09 suggests that the company is not a manipulator.

LAYN' s Beneish M-Score Range Over the Past 10 Years
Min: -3.93   Max: -1.44
Current: -3.09

-3.93
-1.44

During the past 13 years, the highest Beneish M-Score of Layne Christensen Co was -1.44. The lowest was -3.93. And the median was -2.84.


Definition

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 Layne Christensen 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 * 1.0252+0.528 * 0.8824+0.404 * 0.9747+0.892 * 0.8991+0.115 * 1.2103
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9439+4.679 * -0.105-0.327 * 1.0469
=-3.09

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

This Year (Oct16) TTM:Last Year (Oct15) TTM:
Accounts Receivable was $86.1 Mil.
Revenue was 153.567 + 159.049 + 159.739 + 159.243 = $631.6 Mil.
Gross Profit was 27.622 + 28.695 + 29.37 + 26.586 = $112.3 Mil.
Total Current Assets was $282.8 Mil.
Total Assets was $473.5 Mil.
Property, Plant and Equipment(Net PPE) was $106.2 Mil.
Depreciation, Depletion and Amortization(DDA) was $28.0 Mil.
Selling, General & Admin. Expense(SGA) was $97.2 Mil.
Total Current Liabilities was $150.2 Mil.
Long-Term Debt was $161.5 Mil.
Net Income was -5.043 + -5.31 + -8.803 + -16.623 = $-35.8 Mil.
Non Operating Income was 1.795 + -0.374 + 0.916 + -1.625 = $0.7 Mil.
Cash Flow from Operations was 14.081 + 3.265 + -5.577 + 1.478 = $13.2 Mil.
Accounts Receivable was $93.4 Mil.
Revenue was 173.179 + 176.317 + 174.271 + 178.711 = $702.5 Mil.
Gross Profit was 30.238 + 25.068 + 31.04 + 23.847 = $110.2 Mil.
Total Current Assets was $306.4 Mil.
Total Assets was $518.5 Mil.
Property, Plant and Equipment(Net PPE) was $117.2 Mil.
Depreciation, Depletion and Amortization(DDA) was $39.6 Mil.
Selling, General & Admin. Expense(SGA) was $114.6 Mil.
Total Current Liabilities was $163.3 Mil.
Long-Term Debt was $162.7 Mil.



1. DSRI = Days Sales in Receivables Index

Measured as the ratio of days’ sales in receivables in year t to year t-1.

A large increase in DSR could be indicative of revenue inflation.

DSRI=(Receivables_t / Revenue_t) / (Receivables_t-1 / Revenue_t-1)
=(86.128 / 631.598) / (93.435 / 702.478)
=0.13636522 / 0.13300772
=1.0252

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.

GMI=GrossMargin_t-1 / GrossMargin_t
=(GrossProfit_t-1 / Revenue_t-1) / (GrossProfit_t / Revenue_t)
=(110.193 / 702.478) / (112.273 / 631.598)
=0.15686328 / 0.17776022
=0.8824

3. AQI = Asset Quality Index

AQI is the ratio of asset quality in year t to year t-1.

Asset quality is measured as the ratio of non-current assets other than plant, property and equipment to total assets.

AQI=(1 - (CurrentAssets_t + PPE_t) / TotalAssets_t) / (1 - (CurrentAssets_t-1 + PPE_t-1) / TotalAssets_t-1)
=(1 - (282.79 + 106.192) / 473.491) / (1 - (306.406 + 117.153) / 518.508)
=0.17848069 / 0.18311964
=0.9747

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.

SGI=Sales_t / Sales_t-1
=Revenue_t / Revenue_t-1
=631.598 / 702.478
=0.8991

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))
=(39.589 / (39.589 + 117.153)) / (28.004 / (28.004 + 106.192))
=0.25257429 / 0.20867984
=1.2103

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)
=(97.232 / 631.598) / (114.573 / 702.478)
=0.15394602 / 0.16309835
=0.9439

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)
=((161.475 + 150.188) / 473.491) / ((162.712 + 163.308) / 518.508)
=0.6582237 / 0.62876561
=1.0469

8. TATA = Total Accruals to Total Assets

Total accruals calculated as the change in working capital accounts other than cash less depreciation.

TATA=(IncomefromContinuingOperations_t - CashFlowsfromOperations_t) / TotalAssets_t
=(NetIncome_t - NonOperatingIncome_t - CashFlowsfromOperations_t) / TotalAssets_t
=(-35.779 - 0.712 - 13.247) / 473.491
=-0.105

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.

Layne Christensen Co has a M-score of -3.09 suggests that the company will not be a manipulator.


Related Terms

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


Historical Data

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

Layne Christensen Co Annual Data

Jan07Jan08Jan09Jan10Jan11Jan12Jan13Jan14Jan15Jan16
DSRI 0.80680.64751.23851.22751.02910.650.98210.79411.22780.9582
GMI 0.99150.97241.0611.05721.05781.04341.22351.06431.08040.921
AQI 0.81981.03481.07491.0321.13410.64671.19811.06071.0510.8086
SGI 1.5611.20131.1610.85951.15411.10610.91670.76150.93330.9479
DEPI 0.84630.8860.84990.88821.16370.91520.94080.81910.87451.1508
SGAI 0.93930.97310.9661.10930.94511.05181.01961.09050.99320.9746
LVGI 1.05120.57210.90981.03041.03031.23581.14151.06741.21531.1297
TATA -0.1013-0.0749-0.1121-0.1269-0.0641-0.0116-0.0884-0.2029-0.1543-0.072
M-score -2.73-2.84-2.56-2.99-2.51-2.98-2.84-3.83-3.07-3.04

Layne Christensen Co Quarterly Data

Jul14Oct14Jan15Apr15Jul15Oct15Jan16Apr16Jul16Oct16
DSRI 1.10571.11421.23461.13890.85120.84830.97920.84411.05391.0252
GMI 1.02090.94311.09350.97040.96410.9880.91610.97860.90340.8824
AQI 1.20041.12031.0511.15611.17711.01830.80860.96270.83510.9747
SGI 0.78080.85250.92810.99311.03441.00170.92760.9080.8940.8991
DEPI 0.81740.81670.87450.85360.92571.00411.15081.10771.29361.2103
SGAI 0.95030.81710.97650.96271.02891.11190.98761.01510.9540.9439
LVGI 1.19471.19371.21531.1441.11491.10031.12971.06471.04671.0469
TATA -0.1515-0.1587-0.1545-0.1647-0.0875-0.0537-0.072-0.0306-0.0665-0.105
M-score -3.27-3.28-3.06-3.14-2.99-2.92-3.05-2.89-2.93-3.09
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