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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 Lafarge SA was -2.31. The lowest was -3.25. And the median was -2.58.
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 Lafarge SA 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 * 0.9602||+||0.528 * 1.032||+||0.404 * 1.0421||+||0.892 * 0.9671||+||0.115 * 0.9344|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9504||+||4.679 * -0.0253||-||0.327 * 0.9152|
|This Year (Dec14) TTM:||Last Year (Dec13) TTM:|
|Accounts Receivable was $1,969 Mil.|
Revenue was 3954.37731196 + 4685.56701031 + 4574.72826087 + 3641.77040111 = $16,856 Mil.
Gross Profit was 906.288532676 + 1243.55670103 + 1195.65217391 + 587.828492393 = $3,933 Mil.
Total Current Assets was $7,239 Mil.
Total Assets was $42,915 Mil.
Property, Plant and Equipment(Net PPE) was $14,861 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,103 Mil.
Selling, General & Admin. Expense(SGA) was $1,478 Mil.
Total Current Liabilities was $6,678 Mil.
Long-Term Debt was $11,547 Mil.
Net Income was -178.79161529 + 280.927835052 + 278.532608696 + -186.721991701 = $194 Mil.
Non Operating Income was 7.39827373613 + 42.5257731959 + 55.7065217391 + -15.214384509 = $90 Mil.
Cash Flow from Operations was 652.281134402 + 590.206185567 + 40.7608695652 + -95.4356846473 = $1,188 Mil.
|Accounts Receivable was $2,121 Mil.
Revenue was 4330.58984911 + 4939.91989319 + 4695.25065963 + 3465.02590674 = $17,431 Mil.
Gross Profit was 1037.03703704 + 1369.82643525 + 1232.18997361 + 558.29015544 = $4,197 Mil.
Total Current Assets was $9,309 Mil.
Total Assets was $48,331 Mil.
Property, Plant and Equipment(Net PPE) was $16,528 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,140 Mil.
Selling, General & Admin. Expense(SGA) was $1,608 Mil.
Total Current Liabilities was $7,945 Mil.
Long-Term Debt was $14,481 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)|
|=||(1969.17385943 / 16856.4429842)||/||(2120.7133059 / 17430.7863087)|
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)|
|=||(1243.55670103 / 17430.7863087)||/||(906.288532676 / 16856.4429842)|
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 - (7239.2108508 + 14860.6658446) / 42914.919852)||/||(1 - (9308.64197531 + 16528.1207133) / 48330.5898491)|
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))|
|=||(1140.30932668 / (1140.30932668 + 16528.1207133))||/||(1102.56567678 / (1102.56567678 + 14860.6658446))|
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)|
|=||(1477.9393208 / 16856.4429842)||/||(1608.13116596 / 17430.7863087)|
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)|
|=||((11547.4722565 + 6678.17509248) / 42914.919852)||/||((14481.4814815 + 7945.1303155) / 48330.5898491)|
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|
|=||(193.946836756 - 90.4161841621||-||1187.81250489)||/||42914.919852|
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.
Lafarge SA has a M-score of -2.60 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
Lafarge SA Annual Data
Lafarge SA Quarterly Data