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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 Lee Enterprises Inc was -1.20. The lowest was -5.98. And the median was -2.81.
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 Lee Enterprises 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 * 0.9535||+||0.528 * 0.9922||+||0.404 * 1.0155||+||0.892 * 0.982||+||0.115 * 1.0464|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9883||+||4.679 * -0.0815||-||0.327 * 0.9736|
|This Year (Dec14) TTM:||Last Year (Dec13) TTM:|
|Accounts Receivable was $72.0 Mil.|
Revenue was 176.154 + 162.094 + 163.125 + 154.093 = $655.5 Mil.
Gross Profit was 167.308 + 153.22 + 153.901 + 144.759 = $619.2 Mil.
Total Current Assets was $103.6 Mil.
Total Assets was $809.3 Mil.
Property, Plant and Equipment(Net PPE) was $156.1 Mil.
Depreciation, Depletion and Amortization(DDA) was $46.6 Mil.
Selling, General & Admin. Expense(SGA) was $242.3 Mil.
Total Current Liabilities was $116.0 Mil.
Long-Term Debt was $756.3 Mil.
Net Income was 9.753 + 3.163 + -9.746 + 1.486 = $4.7 Mil.
Non Operating Income was -2.28 + 4 + -23.433 + -0.072 = $-21.8 Mil.
Cash Flow from Operations was 22.29 + 12.492 + 34.838 + 22.752 = $92.4 Mil.
|Accounts Receivable was $76.9 Mil.
Revenue was 177.385 + 162.463 + 167.019 + 160.603 = $667.5 Mil.
Gross Profit was 166.823 + 152.339 + 156.548 + 149.891 = $625.6 Mil.
Total Current Assets was $105.8 Mil.
Total Assets was $820.2 Mil.
Property, Plant and Equipment(Net PPE) was $165.9 Mil.
Depreciation, Depletion and Amortization(DDA) was $52.6 Mil.
Selling, General & Admin. Expense(SGA) was $249.7 Mil.
Total Current Liabilities was $95.9 Mil.
Long-Term Debt was $812.1 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)|
|=||(71.959 / 655.466)||/||(76.85 / 667.47)|
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)|
|=||(153.22 / 667.47)||/||(167.308 / 655.466)|
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 - (103.61 + 156.089) / 809.327)||/||(1 - (105.763 + 165.935) / 820.236)|
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))|
|=||(52.62 / (52.62 + 165.935))||/||(46.645 / (46.645 + 156.089))|
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)|
|=||(242.343 / 655.466)||/||(249.702 / 667.47)|
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)|
|=||((756.3 + 115.993) / 809.327)||/||((812.109 + 95.879) / 820.236)|
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|
|=||(4.656 - -21.785||-||92.372)||/||809.327|
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.
Lee Enterprises Inc has a M-score of -2.90 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
Lee Enterprises Inc Annual Data
Lee Enterprises Inc Quarterly Data