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LHC Group Inc (NAS:LHCG)
Beneish M-Score
-2.72 (As of Today)

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.

LHC Group Inc has a M-score of -2.72 suggests that the company is not a manipulator.

LHCG' s 10-Year Beneish M-Score Range
Min: -3.42   Max: -1.85
Current: -2.72

-3.42
-1.85

During the past 13 years, the highest Beneish M-Score of LHC Group Inc was -1.85. The lowest was -3.42. And the median was -2.67.


Definition

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 LHC Group 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 * 1.009+0.528 * 1.0269+0.404 * 1.0617+0.892 * 1.03+0.115 * 0.9717
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0214+4.679 * -0.0385-0.327 * 1.3905
=-2.72

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.

This Year (Mar14) TTM:Last Year (Mar13) TTM:
Accounts Receivable was $86.4 Mil.
Revenue was 163.681 + 165.28 + 164.748 + 166.302 = $660.0 Mil.
Gross Profit was 66.347 + 70.039 + 66.782 + 69.293 = $272.5 Mil.
Total Current Assets was $114.8 Mil.
Total Assets was $468.1 Mil.
Property, Plant and Equipment(Net PPE) was $31.3 Mil.
Depreciation, Depletion and Amortization(DDA) was $8.6 Mil.
Selling, General & Admin. Expense(SGA) was $217.1 Mil.
Total Current Liabilities was $52.5 Mil.
Long-Term Debt was $71.0 Mil.
Net Income was 4.068 + 4.969 + 5.297 + 5.79 = $20.1 Mil.
Non Operating Income was 0.033 + 0.059 + 0.054 + 0.065 = $0.2 Mil.
Cash Flow from Operations was 6.103 + 19.535 + -1.69 + 14.001 = $37.9 Mil.
Accounts Receivable was $83.1 Mil.
Revenue was 161.953 + 161.827 + 158.926 + 158.055 = $640.8 Mil.
Gross Profit was 68.705 + 69.386 + 67.692 + 65.837 = $271.6 Mil.
Total Current Assets was $110.0 Mil.
Total Assets was $394.9 Mil.
Property, Plant and Equipment(Net PPE) was $29.0 Mil.
Depreciation, Depletion and Amortization(DDA) was $7.7 Mil.
Selling, General & Admin. Expense(SGA) was $206.4 Mil.
Total Current Liabilities was $51.7 Mil.
Long-Term Debt was $23.2 Mil.



1. DSRI = Days Sales in Receivables Index

Measured as the ratio of days’ sales in receivables in year t to year t-1.

A large increase in DSR could be indicative of revenue inflation.

DSRI=(Receivables_t / Revenue_t) / (Receivables_t-1 / Revenue_t-1)
=(86.366 / 660.011) / (83.097 / 640.761)
=0.13085539 / 0.12968486
=1.009

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.

GMI=GrossMargin_t-1 / GrossMargin_t
=(GrossProfit_t-1 / Revenue_t-1) / (GrossProfit_t / Revenue_t)
=(70.039 / 640.761) / (66.347 / 660.011)
=0.4239022 / 0.41281282
=1.0269

3. AQI = Asset Quality Index

AQI is the ratio of asset quality in year t to year t-1.

Asset quality is measured as the ratio of non-current assets other than plant, property and equipment to total assets.

AQI=(1 - (CurrentAssets_t + PPE_t) / TotalAssets_t) / (1 - (CurrentAssets_t-1 + PPE_t-1) / TotalAssets_t-1)
=(1 - (114.784 + 31.273) / 468.1) / (1 - (109.983 + 29.037) / 394.907)
=0.68797906 / 0.64796775
=1.0617

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.

SGI=Sales_t / Sales_t-1
=Revenue_t / Revenue_t-1
=660.011 / 640.761
=1.03

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))
=(7.717 / (7.717 + 29.037)) / (8.62 / (8.62 + 31.273))
=0.20996354 / 0.21607801
=0.9717

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)
=(217.122 / 660.011) / (206.378 / 640.761)
=0.32896724 / 0.32208265
=1.0214

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)
=((70.953 + 52.496) / 468.1) / ((23.197 + 51.699) / 394.907)
=0.26372356 / 0.18965478
=1.3905

8. TATA = Total Accruals to Total Assets

Total accruals calculated as the change in working capital accounts other than cash less depreciation.

TATA=(IncomefromContinuingOperations_t - CashFlowsfromOperations_t) / TotalAssets_t
=(NetIncome_t - NonOperatingIncome_t - CashFlowsfromOperations_t) / TotalAssets_t
=(20.124 - 0.211 - 37.949) / 468.1
=-0.0385

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.

LHC Group Inc has a M-score of -2.72 suggests that the company will not be a manipulator.


Related Terms

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


Historical Data

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.

LHC Group Inc Annual Data

Dec04Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13
DSRI 1.18670.8940.96880.69840.86880.90031.08430.91951.021
GMI 1.07780.95860.9980.9511.04411.01761.08751.04181.0212
AQI 1.47631.26091.36131.31941.02811.01450.92821.05441.0131
SGI 1.34111.40371.36381.28371.39051.18721.00361.00581.0325
DEPI 0.97020.85140.88251.04531.00940.84541.03571.00760.9889
SGAI 1.01641.00571.10120.9050.99520.99021.36040.74181.0085
LVGI 0.35240.80390.87461.54970.85910.76141.61770.82881.0132
TATA 0.0263-0.0210.0366-0.1851-0.0164-0.0671-0.0292-0.1228-0.0564
M-score -1.44-2.19-1.86-3.43-2.25-2.64-2.78-2.98-2.69

LHC Group Inc Quarterly Data

Dec11Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14
DSRI 1.08431.14921.1571.13770.91950.87120.94181.00231.0211.009
GMI 1.08751.07531.09311.06821.04181.03811.00941.02091.02121.0269
AQI 0.92820.97430.98691.05661.05441.06681.05511.04171.01311.0617
SGI 1.00360.97330.95780.98471.00581.01571.03361.03381.03251.03
DEPI 1.03571.02881.03031.06911.00761.00891.01930.99470.98890.9717
SGAI 1.36041.32111.32111.27460.74190.74860.75020.75271.00851.0214
LVGI 1.61771.24991.31320.75710.82881.08761.22450.98931.01321.3905
TATA -0.0292-0.0492-0.0552-0.086-0.1228-0.0948-0.0905-0.069-0.0564-0.0385
M-score -2.78-2.70-2.74-2.67-2.98-2.97-2.93-2.70-2.69-2.72
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