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Layne Christensen Co (NAS:LAYN)
Beneish M-Score
-3.18 (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 -3.18 suggests that the company is not a manipulator.

LAYN' s 10-Year Beneish M-Score Range
Min: -3.9   Max: -1.58
Current: -3.18

-3.9
-1.58

During the past 13 years, the highest Beneish M-Score of Layne Christensen Co was -1.58. The lowest was -3.90. And the median was -2.76.


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 * 1.0447+0.528 * 1.0315+0.404 * 1.2004+0.892 * 0.8263+0.115 * 0.8174
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9879+4.679 * -0.1282-0.327 * 1.1947
=-3.18

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.

This Year (Jul14) TTM:Last Year (Jul13) TTM:
Accounts Receivable was $111.1 Mil.
Revenue was 210.363 + 191.24 + 184.36 + 216.462 = $802.4 Mil.
Gross Profit was 31.365 + 29.089 + 31.156 + 39.554 = $131.2 Mil.
Total Current Assets was $306.1 Mil.
Total Assets was $591.9 Mil.
Property, Plant and Equipment(Net PPE) was $175.4 Mil.
Depreciation, Depletion and Amortization(DDA) was $59.0 Mil.
Selling, General & Admin. Expense(SGA) was $131.2 Mil.
Total Current Liabilities was $199.7 Mil.
Long-Term Debt was $130.1 Mil.
Net Income was -55.028 + -27.727 + -14.268 + -15.772 = $-112.8 Mil.
Non Operating Income was 1.836 + 0.041 + -12.009 + -2.18 = $-12.3 Mil.
Cash Flow from Operations was -15.775 + -12.688 + 2.019 + 1.843 = $-24.6 Mil.
Accounts Receivable was $128.6 Mil.
Revenue was 232.015 + 226.446 + 229.742 + 282.879 = $971.1 Mil.
Gross Profit was 39.891 + 36.891 + 28.819 + 58.137 = $163.7 Mil.
Total Current Assets was $349.0 Mil.
Total Assets was $701.0 Mil.
Property, Plant and Equipment(Net PPE) was $243.1 Mil.
Depreciation, Depletion and Amortization(DDA) was $62.9 Mil.
Selling, General & Admin. Expense(SGA) was $160.7 Mil.
Total Current Liabilities was $225.5 Mil.
Long-Term Debt was $101.5 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)
=(111.052 / 802.425) / (128.639 / 971.082)
=0.13839549 / 0.13246976
=1.0447

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)
=(29.089 / 971.082) / (31.365 / 802.425)
=0.16861398 / 0.16345951
=1.0315

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 - (306.145 + 175.418) / 591.877) / (1 - (349.045 + 243.12) / 701.008)
=0.18637994 / 0.15526642
=1.2004

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
=802.425 / 971.082
=0.8263

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))
=(62.928 / (62.928 + 243.12)) / (58.955 / (58.955 + 175.418))
=0.20561481 / 0.25154348
=0.8174

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)
=(131.216 / 802.425) / (160.738 / 971.082)
=0.16352432 / 0.16552464
=0.9879

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)
=((130.124 + 199.689) / 591.877) / ((101.466 + 225.499) / 701.008)
=0.55723233 / 0.46642121
=1.1947

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
=(-112.795 - -12.312 - -24.601) / 591.877
=-0.1282

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 -3.18 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 own currency.

Layne Christensen Co Annual Data

Jan05Jan06Jan07Jan08Jan09Jan10Jan11Jan12Jan13Jan14
DSRI 0.7771.24581.13020.96210.53861.89951.00330.65080.94850.8299
GMI 1.02381.06150.99150.97241.0611.05721.01741.04531.19461.0843
AQI 0.96051.73830.81981.03481.07491.0321.13410.64671.19810.7757
SGI 1.26251.34811.5611.20131.1610.85951.18381.10480.94920.7989
DEPI 1.11441.23660.84630.8860.84990.88821.16370.91520.94080.9397
SGAI 0.88460.86210.93930.97310.98161.06190.9671.05951.03331.1181
LVGI 1.01941.03381.05120.57210.90981.01561.04521.23411.14311.0716
TATA -0.0451-0.07-0.1013-0.0735-0.1151-0.1379-0.0483-0.1314-0.0984-0.1784
M-score -2.64-1.90-2.44-2.55-3.22-2.41-2.47-3.54-2.91-3.75

Layne Christensen Co Quarterly Data

Apr12Jul12Oct12Jan13Apr13Jul13Oct13Jan14Apr14Jul14
DSRI 1.8161.07571.04680.94580.57810.87610.82770.83220.90681.0447
GMI 1.10691.11581.13961.19361.17961.22671.2611.08521.04921.0315
AQI 0.66480.6350.67791.19811.14860.9490.93080.77570.85111.2004
SGI 1.07521.02960.99610.95190.90050.85430.80430.79660.80110.8263
DEPI 0.91480.86470.86950.94080.91610.98740.980.93970.95250.8174
SGAI 1.04521.07111.03731.03341.09691.09611.20441.11811.04960.9879
LVGI 1.20271.31091.27831.14311.13141.0871.12681.07161.18921.1947
TATA -0.138-0.187-0.1621-0.0985-0.1437-0.2104-0.2392-0.177-0.1361-0.1282
M-score -2.47-3.47-3.37-2.91-3.54-3.66-3.90-3.74-3.49-3.18
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