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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 -2.02. The lowest was -3.18. And the median was -2.67.
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 * 0.8335||+||0.528 * 0.9751||+||0.404 * 0.8393||+||0.892 * 1.1097||+||0.115 * 0.8293|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9792||+||4.679 * -0.0354||-||0.327 * 0.8298|
* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.
|This Year (Jun15) TTM:||Last Year (Jun14) TTM:|
|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.
Net Income was 10.817 + 18.937 + 5.733 + 4.158 = $39.6 Mil.
Non Operating Income was -0.553 + 19.669 + 0.547 + 0.508 = $20.2 Mil.
Cash Flow from Operations was 5.592 + -1.097 + 11.129 + 17.125 = $32.7 Mil.
|Accounts Receivable was $101.8 Mil.
Revenue was 148.793 + 125.226 + 99.894 + 97.995 = $471.9 Mil.
Gross Profit was 34.653 + 26.199 + 20.329 + 20.494 = $101.7 Mil.
Total Current Assets was $229.5 Mil.
Total Assets was $377.6 Mil.
Property, Plant and Equipment(Net PPE) was $115.0 Mil.
Depreciation, Depletion and Amortization(DDA) was $14.7 Mil.
Selling, General & Admin. Expense(SGA) was $68.8 Mil.
Total Current Liabilities was $73.5 Mil.
Long-Term Debt was $60.7 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)|
|=||(94.133 / 523.677)||/||(101.771 / 471.908)|
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)|
|=||(27.7 / 471.908)||/||(33.889 / 523.677)|
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 - (235.915 + 111.616) / 375.12)||/||(1 - (229.483 + 114.995) / 377.565)|
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))|
|=||(14.734 / (14.734 + 114.995))||/||(17.711 / (17.711 + 111.616))|
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)|
|=||(74.759 / 523.677)||/||(68.801 / 471.908)|
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)|
|=||((40.006 + 70.656) / 375.12)||/||((60.703 + 73.52) / 377.565)|
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|
|=||(39.645 - 20.171||-||32.749)||/||375.12|
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 -2.74 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