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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 -2.80.
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 * 1.0567||+||0.528 * 1.0288||+||0.404 * 1.1561||+||0.892 * 1.0703||+||0.115 * 0.8536|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.8878||+||4.679 * -0.1713||-||0.327 * 1.144|
|This Year (Apr15) TTM:||Last Year (Apr14) TTM:|
|Accounts Receivable was $118.4 Mil.|
Revenue was 194.363 + 193.903 + 222.906 + 210.363 = $821.5 Mil.
Gross Profit was 33.687 + 24.635 + 37.447 + 31.365 = $127.1 Mil.
Total Current Assets was $312.5 Mil.
Total Assets was $566.5 Mil.
Property, Plant and Equipment(Net PPE) was $146.1 Mil.
Depreciation, Depletion and Amortization(DDA) was $48.3 Mil.
Selling, General & Admin. Expense(SGA) was $122.1 Mil.
Total Current Liabilities was $185.7 Mil.
Long-Term Debt was $161.8 Mil.
Net Income was -6.559 + -22.891 + -4.504 + -55.028 = $-89.0 Mil.
Non Operating Income was 5.817 + -1.839 + -0.582 + 1.836 = $5.2 Mil.
Cash Flow from Operations was 13.237 + -10.529 + 15.89 + -15.775 = $2.8 Mil.
|Accounts Receivable was $104.7 Mil.
Revenue was 174.389 + 169.934 + 201.978 + 221.254 = $767.6 Mil.
Gross Profit was 22.658 + 26.027 + 35.665 + 37.848 = $122.2 Mil.
Total Current Assets was $346.2 Mil.
Total Assets was $680.2 Mil.
Property, Plant and Equipment(Net PPE) was $221.9 Mil.
Depreciation, Depletion and Amortization(DDA) was $59.7 Mil.
Selling, General & Admin. Expense(SGA) was $128.5 Mil.
Total Current Liabilities was $216.7 Mil.
Long-Term Debt was $147.9 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)|
|=||(118.422 / 821.535)||/||(104.702 / 767.555)|
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)|
|=||(24.635 / 767.555)||/||(33.687 / 821.535)|
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 - (312.544 + 146.074) / 566.548)||/||(1 - (346.172 + 221.91) / 680.164)|
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))|
|=||(59.696 / (59.696 + 221.91))||/||(48.258 / (48.258 + 146.074))|
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)|
|=||(122.076 / 821.535)||/||(128.47 / 767.555)|
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)|
|=||((161.775 + 185.659) / 566.548)||/||((147.919 + 216.673) / 680.164)|
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|
|=||(-88.982 - 5.232||-||2.823)||/||566.548|
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 -3.13 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