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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 -1.98. The lowest was -3.51. 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 * 0.903||+||0.528 * 1.0059||+||0.404 * 1.0399||+||0.892 * 0.9213||+||0.115 * 0.9138|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9462||+||4.679 * -0.0231||-||0.327 * 0.8987|
|This Year (Mar15) TTM:||Last Year (Mar14) TTM:|
|Accounts Receivable was $1,747 Mil.|
Revenue was 3007.57575758 + 3954.37731196 + 4685.56701031 + 4574.72826087 = $16,222 Mil.
Gross Profit was 525.974025974 + 906.288532676 + 1243.55670103 + 1195.65217391 = $3,871 Mil.
Total Current Assets was $6,601 Mil.
Total Assets was $39,667 Mil.
Property, Plant and Equipment(Net PPE) was $13,700 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,044 Mil.
Selling, General & Admin. Expense(SGA) was $1,396 Mil.
Total Current Liabilities was $6,673 Mil.
Long-Term Debt was $9,885 Mil.
Net Income was -103.896103896 + -178.79161529 + 280.927835052 + 278.532608696 = $277 Mil.
Non Operating Income was 0 + 0 + 0 + 0 = $0 Mil.
Cash Flow from Operations was -88.7445887446 + 652.281134402 + 590.206185567 + 40.7608695652 = $1,195 Mil.
|Accounts Receivable was $2,100 Mil.
Revenue was 3641.77040111 + 4330.58984911 + 4939.91989319 + 4695.25065963 = $17,608 Mil.
Gross Profit was 587.828492393 + 1037.03703704 + 1369.82643525 + 1232.18997361 = $4,227 Mil.
Total Current Assets was $9,196 Mil.
Total Assets was $48,267 Mil.
Property, Plant and Equipment(Net PPE) was $16,409 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,136 Mil.
Selling, General & Admin. Expense(SGA) was $1,602 Mil.
Total Current Liabilities was $7,817 Mil.
Long-Term Debt was $14,602 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)|
|=||(1746.75324675 / 16222.2483407)||/||(2099.58506224 / 17607.530803)|
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)|
|=||(906.288532676 / 17607.530803)||/||(525.974025974 / 16222.2483407)|
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 - (6600.64935065 + 13700.2164502) / 39666.6666667)||/||(1 - (9196.40387275 + 16409.4052559) / 48266.9432918)|
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))|
|=||(1135.58304944 / (1135.58304944 + 16409.4052559))||/||(1044.37559577 / (1044.37559577 + 13700.2164502))|
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)|
|=||(1396.15975873 / 16222.2483407)||/||(1601.53623551 / 17607.530803)|
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)|
|=||((9885.28138528 + 6673.16017316) / 39666.6666667)||/||((14601.659751 + 7817.42738589) / 48266.9432918)|
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|
|=||(276.772724561 - 0||-||1194.50360079)||/||39666.6666667|
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 -2.70 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