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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 * 0.7137||+||0.528 * 0.9805||+||0.404 * 0.842||+||0.892 * 1.2682||+||0.115 * 0.7193|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.047||+||4.679 * -0.073||-||0.327 * 0.8886|
* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.
|This Year (Mar15) TTM:||Last Year (Mar14) TTM:|
|Accounts Receivable was $91.3 Mil.|
Revenue was 127.306 + 127.583 + 134.227 + 148.793 = $537.9 Mil.
Gross Profit was 27.7 + 25.562 + 28.564 + 34.653 = $116.5 Mil.
Total Current Assets was $228.6 Mil.
Total Assets was $366.6 Mil.
Property, Plant and Equipment(Net PPE) was $110.3 Mil.
Depreciation, Depletion and Amortization(DDA) was $18.2 Mil.
Selling, General & Admin. Expense(SGA) was $80.0 Mil.
Total Current Liabilities was $78.2 Mil.
Long-Term Debt was $40.1 Mil.
Net Income was 18.937 + 5.733 + 4.158 + 8.24 = $37.1 Mil.
Non Operating Income was 19.669 + 0.547 + 0.508 + -0.299 = $20.4 Mil.
Cash Flow from Operations was -1.097 + 11.129 + 17.125 + 16.234 = $43.4 Mil.
|Accounts Receivable was $100.8 Mil.
Revenue was 125.226 + 99.894 + 97.995 + 101.051 = $424.2 Mil.
Gross Profit was 26.199 + 20.329 + 20.494 + 23.037 = $90.1 Mil.
Total Current Assets was $217.2 Mil.
Total Assets was $366.6 Mil.
Property, Plant and Equipment(Net PPE) was $116.7 Mil.
Depreciation, Depletion and Amortization(DDA) was $13.2 Mil.
Selling, General & Admin. Expense(SGA) was $60.2 Mil.
Total Current Liabilities was $72.3 Mil.
Long-Term Debt was $60.9 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)|
|=||(91.252 / 537.909)||/||(100.828 / 424.166)|
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)|
|=||(25.562 / 424.166)||/||(27.7 / 537.909)|
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 - (228.626 + 110.289) / 366.556)||/||(1 - (217.15 + 116.653) / 366.64)|
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))|
|=||(13.206 / (13.206 + 116.653))||/||(18.16 / (18.16 + 110.289))|
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)|
|=||(79.979 / 537.909)||/||(60.237 / 424.166)|
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)|
|=||((40.146 + 78.201) / 366.556)||/||((60.881 + 72.339) / 366.64)|
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|
|=||(37.068 - 20.425||-||43.391)||/||366.556|
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 -2.92 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