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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 -2.78.
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 * 1.2576||+||0.528 * 1.1118||+||0.404 * 0.9235||+||0.892 * 0.9985||+||0.115 * 0.9569|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9131||+||4.679 * -0.1586||-||0.327 * 1.2213|
|This Year (Jan15) TTM:||Last Year (Jan14) TTM:|
|Accounts Receivable was $110.8 Mil.|
Revenue was 193.903 + 222.906 + 210.363 + 191.24 = $818.4 Mil.
Gross Profit was 24.635 + 37.447 + 31.365 + 29.089 = $122.5 Mil.
Total Current Assets was $284.5 Mil.
Total Assets was $545.5 Mil.
Property, Plant and Equipment(Net PPE) was $153.2 Mil.
Depreciation, Depletion and Amortization(DDA) was $51.8 Mil.
Selling, General & Admin. Expense(SGA) was $126.1 Mil.
Total Current Liabilities was $179.7 Mil.
Long-Term Debt was $132.1 Mil.
Net Income was -22.891 + -4.504 + -55.028 + -27.727 = $-110.2 Mil.
Non Operating Income was -1.839 + -0.582 + 1.836 + 0.041 = $-0.5 Mil.
Cash Flow from Operations was -10.529 + 15.89 + -15.775 + -12.688 = $-23.1 Mil.
|Accounts Receivable was $88.2 Mil.
Revenue was 169.934 + 201.978 + 221.254 + 226.446 = $819.6 Mil.
Gross Profit was 26.027 + 35.665 + 37.848 + 36.891 = $136.4 Mil.
Total Current Assets was $316.9 Mil.
Total Assets was $646.6 Mil.
Property, Plant and Equipment(Net PPE) was $191.4 Mil.
Depreciation, Depletion and Amortization(DDA) was $61.1 Mil.
Selling, General & Admin. Expense(SGA) was $138.3 Mil.
Total Current Liabilities was $195.5 Mil.
Long-Term Debt was $107.1 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)|
|=||(110.779 / 818.412)||/||(88.217 / 819.612)|
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)|
|=||(37.447 / 819.612)||/||(24.635 / 818.412)|
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 - (284.528 + 153.184) / 545.513)||/||(1 - (316.857 + 191.393) / 646.618)|
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))|
|=||(61.091 / (61.091 + 191.393))||/||(51.841 / (51.841 + 153.184))|
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)|
|=||(126.08 / 818.412)||/||(138.278 / 819.612)|
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)|
|=||((132.137 + 179.696) / 545.513)||/||((107.118 + 195.527) / 646.618)|
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|
|=||(-110.15 - -0.544||-||-23.102)||/||545.513|
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 -3.02 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