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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.
Layne Christensen Co has a M-score of -3.18 suggests that the company is not a manipulator.
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.
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|
|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
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)|
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)|
|=||(29.089 / 971.082)||/||(31.365 / 802.425)|
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 - (306.145 + 175.418) / 591.877)||/||(1 - (349.045 + 243.12) / 701.008)|
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))|
|=||(62.928 / (62.928 + 243.12))||/||(58.955 / (58.955 + 175.418))|
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)|
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)|
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|
|=||(-112.795 - -12.312||-||-24.601)||/||591.877|
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.
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