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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 -2.42. 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 * 0.9947||+||0.528 * 0.9188||+||0.404 * 0.748||+||0.892 * 0.9789||+||0.115 * 1.0115|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.8839||+||4.679 * -0.0255||-||0.327 * 0.7227|
|This Year (Dec15) TTM:||Last Year (Dec14) TTM:|
|Accounts Receivable was $82.1 Mil.|
Revenue was 131.398 + 131.24 + 134.561 + 127.306 = $524.5 Mil.
Gross Profit was 29.217 + 31.691 + 33.889 + 27.7 = $122.5 Mil.
Total Current Assets was $219.3 Mil.
Total Assets was $358.3 Mil.
Property, Plant and Equipment(Net PPE) was $114.4 Mil.
Depreciation, Depletion and Amortization(DDA) was $17.3 Mil.
Selling, General & Admin. Expense(SGA) was $70.0 Mil.
Total Current Liabilities was $61.0 Mil.
Long-Term Debt was $20.2 Mil.
Net Income was 5.319 + 11.186 + 10.817 + 18.937 = $46.3 Mil.
Non Operating Income was 0.035 + 0.15 + -0.553 + 19.669 = $19.3 Mil.
Cash Flow from Operations was 21.213 + 10.402 + 5.592 + -1.097 = $36.1 Mil.
|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.
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)|
|=||(82.149 / 524.505)||/||(84.366 / 535.829)|
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)|
|=||(31.691 / 535.829)||/||(29.217 / 524.505)|
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 - (219.303 + 114.433) / 358.26)||/||(1 - (213.306 + 115.357) / 361.77)|
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))|
|=||(17.646 / (17.646 + 115.357))||/||(17.275 / (17.275 + 114.433))|
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)|
|=||(70.02 / 524.505)||/||(80.93 / 535.829)|
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)|
|=||((20.156 + 61) / 358.26)||/||((40.315 + 73.077) / 361.77)|
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|
|=||(46.259 - 19.301||-||36.11)||/||358.26|
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 -2.66 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