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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 Lydall Inc was -2.14. The lowest was -3.18. And the median was -2.66.
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 Lydall Inc 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 * 0.976||+||0.528 * 0.9052||+||0.404 * 0.8707||+||0.892 * 1.0113||+||0.115 * 1.0743|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9881||+||4.679 * -0.0787||-||0.327 * 0.731|
|This Year (Jun16) TTM:||Last Year (Jun15) TTM:|
|Accounts Receivable was $92.9 Mil.|
Revenue was 137.235 + 129.7 + 131.398 + 131.24 = $529.6 Mil.
Gross Profit was 35.99 + 32.377 + 29.217 + 31.691 = $129.3 Mil.
Total Current Assets was $231.3 Mil.
Total Assets was $373.4 Mil.
Property, Plant and Equipment(Net PPE) was $118.2 Mil.
Depreciation, Depletion and Amortization(DDA) was $17.3 Mil.
Selling, General & Admin. Expense(SGA) was $74.7 Mil.
Total Current Liabilities was $70.4 Mil.
Long-Term Debt was $10.1 Mil.
Net Income was 10.813 + 9.169 + 5.319 + 11.186 = $36.5 Mil.
Non Operating Income was 0.499 + 0.167 + 0.035 + 0.15 = $0.9 Mil.
Cash Flow from Operations was 20.624 + 12.783 + 21.213 + 10.402 = $65.0 Mil.
|Accounts Receivable was $94.1 Mil.
Revenue was 134.561 + 127.306 + 127.583 + 134.227 = $523.7 Mil.
Gross Profit was 33.889 + 27.7 + 25.562 + 28.564 = $115.7 Mil.
Total Current Assets was $235.9 Mil.
Total Assets was $375.1 Mil.
Property, Plant and Equipment(Net PPE) was $111.6 Mil.
Depreciation, Depletion and Amortization(DDA) was $17.7 Mil.
Selling, General & Admin. Expense(SGA) was $74.8 Mil.
Total Current Liabilities was $70.7 Mil.
Long-Term Debt was $40.0 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)|
|=||(92.905 / 529.573)||/||(94.133 / 523.677)|
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)|
|=||(115.715 / 523.677)||/||(129.275 / 529.573)|
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 - (231.297 + 118.214) / 373.423)||/||(1 - (235.915 + 111.616) / 375.12)|
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))|
|=||(17.711 / (17.711 + 111.616))||/||(17.272 / (17.272 + 118.214))|
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)|
|=||(74.704 / 529.573)||/||(74.759 / 523.677)|
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)|
|=||((10.135 + 70.395) / 373.423)||/||((40.006 + 70.656) / 375.12)|
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|
|=||(36.487 - 0.851||-||65.022)||/||373.423|
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.
Lydall Inc has a M-score of -2.86 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
Lydall Inc Annual Data
Lydall Inc Quarterly Data