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GuruFocus has detected 2 Warning Signs with Lydall Inc $LDL.
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Lydall Inc (NYSE:LDL)
Beneish M-Score
-2.01 (As of Today)

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.

Lydall Inc has a M-score of -2.01 signals that the company is a manipulator.

LDL' s Beneish M-Score Range Over the Past 10 Years
Min: -3.18   Max: -2.01
Current: -2.01

-3.18
-2.01

During the past 13 years, the highest Beneish M-Score of Lydall Inc was -2.01. The lowest was -3.18. And the median was -2.63.


Definition

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 * 1.1637+0.528 * 0.9556+0.404 * 3.0665+0.892 * 1.0807+0.115 * 1.2094
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.1067+4.679 * -0.064-0.327 * 1.8309
=-2.01

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

This Year (Dec16) TTM:Last Year (Dec15) TTM:
Accounts Receivable was USD 103.3 Mil.
Revenue was 144.192 + 155.725 + 137.235 + 129.7 = USD 566.9 Mil.
Gross Profit was 31.982 + 38.193 + 35.99 + 32.377 = USD 138.5 Mil.
Total Current Assets was USD 255.6 Mil.
Total Assets was USD 527.0 Mil.
Property, Plant and Equipment(Net PPE) was USD 160.8 Mil.
Depreciation, Depletion and Amortization(DDA) was USD 19.6 Mil.
Selling, General & Admin. Expense(SGA) was USD 83.8 Mil.
Total Current Liabilities was USD 90.4 Mil.
Long-Term Debt was USD 128.1 Mil.
Net Income was 4.42 + 12.785 + 10.813 + 9.169 = USD 37.2 Mil.
Non Operating Income was 0.331 + 0.218 + 0.499 + 0.167 = USD 1.2 Mil.
Cash Flow from Operations was 22.305 + 14.015 + 20.624 + 12.783 = USD 69.7 Mil.
Accounts Receivable was USD 82.1 Mil.
Revenue was 131.398 + 131.24 + 134.561 + 127.306 = USD 524.5 Mil.
Gross Profit was 29.217 + 31.691 + 33.889 + 27.7 = USD 122.5 Mil.
Total Current Assets was USD 219.3 Mil.
Total Assets was USD 358.3 Mil.
Property, Plant and Equipment(Net PPE) was USD 114.4 Mil.
Depreciation, Depletion and Amortization(DDA) was USD 17.3 Mil.
Selling, General & Admin. Expense(SGA) was USD 70.0 Mil.
Total Current Liabilities was USD 61.0 Mil.
Long-Term Debt was USD 20.2 Mil.



1. DSRI = Days Sales in Receivables Index

Measured as the ratio of days’ sales in receivables in year t to year t-1.

A large increase in DSR could be indicative of revenue inflation.

DSRI=(Receivables_t / Revenue_t) / (Receivables_t-1 / Revenue_t-1)
=(103.316 / 566.852) / (82.149 / 524.505)
=0.18226274 / 0.15662196
=1.1637

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.

GMI=GrossMargin_t-1 / GrossMargin_t
=(GrossProfit_t-1 / Revenue_t-1) / (GrossProfit_t / Revenue_t)
=(122.497 / 524.505) / (138.542 / 566.852)
=0.23354782 / 0.24440595
=0.9556

3. AQI = Asset Quality Index

AQI is the ratio of asset quality in year t to year t-1.

Asset quality is measured as the ratio of non-current assets other than plant, property and equipment to total assets.

AQI=(1 - (CurrentAssets_t + PPE_t) / TotalAssets_t) / (1 - (CurrentAssets_t-1 + PPE_t-1) / TotalAssets_t-1)
=(1 - (255.606 + 160.795) / 527.029) / (1 - (219.303 + 114.433) / 358.26)
=0.20990875 / 0.06845308
=3.0665

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.

SGI=Sales_t / Sales_t-1
=Revenue_t / Revenue_t-1
=566.852 / 524.505
=1.0807

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))
=(17.275 / (17.275 + 114.433)) / (19.559 / (19.559 + 160.795))
=0.13116136 / 0.10844783
=1.2094

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)
=(83.75 / 566.852) / (70.02 / 524.505)
=0.1477458 / 0.1334973
=1.1067

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)
=((128.141 + 90.444) / 527.029) / ((20.156 + 61) / 358.26)
=0.41474947 / 0.22652822
=1.8309

8. TATA = Total Accruals to Total Assets

Total accruals calculated as the change in working capital accounts other than cash less depreciation.

TATA=(IncomefromContinuingOperations_t - CashFlowsfromOperations_t) / TotalAssets_t
=(NetIncome_t - NonOperatingIncome_t - CashFlowsfromOperations_t) / TotalAssets_t
=(37.187 - 1.215 - 69.727) / 527.029
=-0.064

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 -2.01 signals that the company is likely to be a manipulator.


Related Terms

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


Historical Data

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

Lydall Inc Annual Data

Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15Dec16
DSRI 0.98560.72671.42390.93240.82721.01721.04871.19810.99471.1637
GMI 0.98681.09741.55140.77810.96820.85710.95880.9980.91880.9556
AQI 0.88751.01060.85510.86350.90760.87610.90561.06690.7483.0665
SGI 1.04830.95260.81431.26981.21350.98781.05031.34640.97891.0807
DEPI 1.03930.91870.93041.03570.90571.01871.09661.04571.01151.2094
SGAI 0.99951.00721.13470.82020.82481.09460.94011.06360.88391.1067
LVGI 0.9720.84121.11431.21590.82760.95220.95031.73110.72271.8309
TATA -0.0509-0.1072-0.1287-0.0353-0.0041-0.0697-0.0403-0.0566-0.0255-0.064
M-score -2.73-3.18-2.69-2.67-2.45-2.93-2.60-2.47-2.66-2.01

Lydall Inc Quarterly Data

Sep14Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16Dec16
DSRI 1.10111.19810.71370.83350.9760.99471.04360.9761.12961.1637
GMI 0.97960.9980.98050.97510.94630.91880.89720.90520.93140.9556
AQI 1.02451.06690.8420.83930.8450.7480.88020.87072.11783.0665
SGI 1.30781.34641.26821.10971.02470.97890.97951.01131.06411.0807
DEPI 1.14461.04570.71930.82930.92211.01151.10331.07431.24351.2094
SGAI 1.05751.06361.0470.97920.85580.88390.90750.98811.06171.1067
LVGI 1.84611.73110.88860.82980.84160.72270.66340.7311.24161.8309
TATA -0.0792-0.0566-0.073-0.03540.0022-0.0255-0.0366-0.0787-0.0645-0.064
M-score -2.75-2.47-2.92-2.74-2.49-2.66-2.59-2.86-2.25-2.01
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