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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 * 1.1296||+||0.528 * 0.9314||+||0.404 * 2.1178||+||0.892 * 1.0641||+||0.115 * 1.2435|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0617||+||4.679 * -0.0645||-||0.327 * 1.2416|
|This Year (Sep16) TTM:||Last Year (Sep15) TTM:|
|Accounts Receivable was $110.3 Mil.|
Revenue was 155.725 + 137.235 + 129.7 + 131.398 = $554.1 Mil.
Gross Profit was 38.193 + 35.99 + 32.377 + 29.217 = $135.8 Mil.
Total Current Assets was $262.6 Mil.
Total Assets was $488.1 Mil.
Property, Plant and Equipment(Net PPE) was $149.7 Mil.
Depreciation, Depletion and Amortization(DDA) was $18.4 Mil.
Selling, General & Admin. Expense(SGA) was $77.8 Mil.
Total Current Liabilities was $83.4 Mil.
Long-Term Debt was $95.1 Mil.
Net Income was 12.785 + 10.813 + 9.169 + 5.319 = $38.1 Mil.
Non Operating Income was 0.218 + 0.499 + 0.167 + 0.035 = $0.9 Mil.
Cash Flow from Operations was 14.015 + 20.624 + 12.783 + 21.213 = $68.6 Mil.
|Accounts Receivable was $91.8 Mil.
Revenue was 131.24 + 134.561 + 127.306 + 127.583 = $520.7 Mil.
Gross Profit was 31.691 + 33.889 + 27.7 + 25.562 = $118.8 Mil.
Total Current Assets was $244.3 Mil.
Total Assets was $383.3 Mil.
Property, Plant and Equipment(Net PPE) was $110.8 Mil.
Depreciation, Depletion and Amortization(DDA) was $17.4 Mil.
Selling, General & Admin. Expense(SGA) was $68.8 Mil.
Total Current Liabilities was $72.9 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)|
|=||(110.286 / 554.058)||/||(91.754 / 520.69)|
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)|
|=||(118.842 / 520.69)||/||(135.777 / 554.058)|
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 - (262.645 + 149.692) / 488.099)||/||(1 - (244.328 + 110.843) / 383.261)|
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))|
|=||(17.437 / (17.437 + 110.843))||/||(18.371 / (18.371 + 149.692))|
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)|
|=||(77.75 / 554.058)||/||(68.824 / 520.69)|
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)|
|=||((95.125 + 83.446) / 488.099)||/||((40.003 + 72.926) / 383.261)|
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|
|=||(38.086 - 0.919||-||68.635)||/||488.099|
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 -2.25 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