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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 Company has a M-score of -4.20 suggests that the company is not a manipulator.
During the past 13 years, the highest Beneish M-Score of Layne Christensen Company was -1.58. The lowest was -4.20. And the median was -2.77.
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 Company 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 * 0.5138||+||0.528 * 1.2175||+||0.404 * 0.9308||+||0.892 * 0.8172||+||0.115 * 0.98|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.225||+||4.679 * -0.239||-||0.327 * 1.1268|
|This Year (Oct13) TTM:||Last Year (Oct12) TTM:|
|Accounts Receivable was $125 Mil.|
Revenue was 216.462 + 232.015 + 226.446 + 234.606 = $910 Mil.
Gross Profit was 39.554 + 39.891 + 36.891 + 32.481 = $149 Mil.
Total Current Assets was $336 Mil.
Total Assets was $685 Mil.
Property, Plant and Equipment(Net PPE) was $239 Mil.
Depreciation, Depletion and Amortization(DDA) was $62 Mil.
Selling, General & Admin. Expense(SGA) was $164 Mil.
Total Current Liabilities was $225 Mil.
Long-Term Debt was $103 Mil.
Net Income was -15.772 + -74.82 + -23.779 + -24.852 = $-139 Mil.
Non Operating Income was -2.18 + -1.232 + 2.386 + 3.08 = $2 Mil.
Cash Flow from Operations was 1.843 + -15.793 + 10.8 + 25.543 = $22 Mil.
|Accounts Receivable was $298 Mil.
Revenue was 281.281 + 287.972 + 271.765 + 271.924 = $1,113 Mil.
Gross Profit was 56.923 + 57.901 + 52.88 + 54.002 = $222 Mil.
Total Current Assets was $429 Mil.
Total Assets was $839 Mil.
Property, Plant and Equipment(Net PPE) was $265 Mil.
Depreciation, Depletion and Amortization(DDA) was $68 Mil.
Selling, General & Admin. Expense(SGA) was $164 Mil.
Total Current Liabilities was $238 Mil.
Long-Term Debt was $118 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)|
|=||(125.269 / 909.529)||/||(298.351 / 1112.942)|
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)|
|=||(39.891 / 1112.942)||/||(39.554 / 909.529)|
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 - (336.318 + 238.682) / 684.94)||/||(1 - (428.902 + 265.298) / 838.862)|
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))|
|=||(67.564 / (67.564 + 265.298))||/||(62.352 / (62.352 + 238.682))|
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)|
|=||(163.697 / 909.529)||/||(163.51 / 1112.942)|
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)|
|=||((102.743 + 225.147) / 684.94)||/||((118.34 + 238.031) / 838.862)|
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|
|=||(-139.223 - 2.054||-||22.393)||/||684.94|
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 Company has a M-score of -4.20 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 Company Annual Data
Layne Christensen Company Quarterly Data