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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 Layne Christensen Co was -1.44. The lowest was -3.93. 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 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 * 1.0539||+||0.528 * 0.9034||+||0.404 * 0.8351||+||0.892 * 0.894||+||0.115 * 1.2936|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.954||+||4.679 * -0.0472||-||0.327 * 1.0467|
* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.
|This Year (Jul16) TTM:||Last Year (Jul15) TTM:|
|Accounts Receivable was $92.1 Mil.|
Revenue was 159.049 + 159.739 + 159.243 + 173.179 = $651.2 Mil.
Gross Profit was 28.695 + 29.37 + 26.586 + 30.238 = $114.9 Mil.
Total Current Assets was $278.1 Mil.
Total Assets was $474.4 Mil.
Property, Plant and Equipment(Net PPE) was $109.3 Mil.
Depreciation, Depletion and Amortization(DDA) was $29.1 Mil.
Selling, General & Admin. Expense(SGA) was $100.6 Mil.
Total Current Liabilities was $147.8 Mil.
Long-Term Debt was $160.6 Mil.
Net Income was -5.31 + -8.803 + -16.623 + -3.442 = $-34.2 Mil.
Non Operating Income was -0.374 + 0.916 + -12.951 + 0.095 = $-12.3 Mil.
Cash Flow from Operations was 3.265 + -5.577 + 1.478 + 1.345 = $0.5 Mil.
|Accounts Receivable was $97.8 Mil.
Revenue was 176.317 + 174.271 + 178.711 + 199.112 = $728.4 Mil.
Gross Profit was 25.068 + 31.04 + 23.847 + 36.144 = $116.1 Mil.
Total Current Assets was $284.5 Mil.
Total Assets was $514.2 Mil.
Property, Plant and Equipment(Net PPE) was $116.9 Mil.
Depreciation, Depletion and Amortization(DDA) was $43.6 Mil.
Selling, General & Admin. Expense(SGA) was $117.9 Mil.
Total Current Liabilities was $157.2 Mil.
Long-Term Debt was $162.3 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)|
|=||(92.135 / 651.21)||/||(97.786 / 728.411)|
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)|
|=||(116.099 / 728.411)||/||(114.889 / 651.21)|
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 - (278.099 + 109.349) / 474.357)||/||(1 - (284.493 + 116.9) / 514.208)|
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))|
|=||(43.62 / (43.62 + 116.9))||/||(29.079 / (29.079 + 109.349))|
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)|
|=||(100.558 / 651.21)||/||(117.906 / 728.411)|
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)|
|=||((160.63 + 147.834) / 474.357)||/||((162.258 + 157.207) / 514.208)|
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|
|=||(-34.178 - -12.314||-||0.511)||/||474.357|
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 -2.84 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
Layne Christensen Co Annual Data
Layne Christensen Co Quarterly Data