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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 -2.39. 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 * 1.1981||+||0.528 * 0.998||+||0.404 * 1.0669||+||0.892 * 1.3464||+||0.115 * 1.0378|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0636||+||4.679 * -0.0566||-||0.327 * 1.7311|
|This Year (Dec14) TTM:||Last Year (Dec13) TTM:|
|Accounts Receivable was $84.4 Mil.|
Revenue was 127.583 + 134.227 + 148.793 + 125.226 = $535.8 Mil.
Gross Profit was 25.562 + 28.564 + 34.653 + 26.199 = $115.0 Mil.
Total Current Assets was $213.3 Mil.
Total Assets was $361.8 Mil.
Property, Plant and Equipment(Net PPE) was $115.4 Mil.
Depreciation, Depletion and Amortization(DDA) was $17.6 Mil.
Selling, General & Admin. Expense(SGA) was $80.9 Mil.
Total Current Liabilities was $73.1 Mil.
Long-Term Debt was $40.3 Mil.
Net Income was 5.733 + 4.158 + 8.24 + 3.716 = $21.8 Mil.
Non Operating Income was 0.547 + 0.508 + -0.299 + -0.055 = $0.7 Mil.
Cash Flow from Operations was 11.129 + 17.125 + 16.234 + -2.86 = $41.6 Mil.
|Accounts Receivable was $52.3 Mil.
Revenue was 99.894 + 97.995 + 101.051 + 99.029 = $398.0 Mil.
Gross Profit was 20.329 + 20.494 + 23.037 + 21.365 = $85.2 Mil.
Total Current Assets was $172.3 Mil.
Total Assets was $274.7 Mil.
Property, Plant and Equipment(Net PPE) was $78.9 Mil.
Depreciation, Depletion and Amortization(DDA) was $12.6 Mil.
Selling, General & Admin. Expense(SGA) was $56.5 Mil.
Total Current Liabilities was $48.7 Mil.
Long-Term Debt was $1.1 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)|
|=||(84.366 / 535.829)||/||(52.301 / 397.969)|
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)|
|=||(28.564 / 397.969)||/||(25.562 / 535.829)|
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 - (213.306 + 115.357) / 361.77)||/||(1 - (172.261 + 78.863) / 274.685)|
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))|
|=||(12.593 / (12.593 + 78.863))||/||(17.646 / (17.646 + 115.357))|
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)|
|=||(80.93 / 535.829)||/||(56.512 / 397.969)|
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)|
|=||((40.315 + 73.077) / 361.77)||/||((1.051 + 48.684) / 274.685)|
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|
|=||(21.847 - 0.701||-||41.628)||/||361.77|
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 -2.47 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