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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 LHC Group Inc was -1.60. The lowest was -3.43. And the median was -2.65.
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 * 1.0792||+||0.528 * 1.0232||+||0.404 * 1.0238||+||0.892 * 1.1257||+||0.115 * 1.1514|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9784||+||4.679 * -0.0155||-||0.327 * 1.4152|
|This Year (Jun16) TTM:||Last Year (Jun15) TTM:|
|Accounts Receivable was $121.6 Mil.|
Revenue was 226.031 + 222.552 + 218.993 + 204.122 = $871.7 Mil.
Gross Profit was 88.903 + 86.951 + 90.053 + 83.249 = $349.2 Mil.
Total Current Assets was $173.5 Mil.
Total Assets was $619.6 Mil.
Property, Plant and Equipment(Net PPE) was $45.9 Mil.
Depreciation, Depletion and Amortization(DDA) was $12.1 Mil.
Selling, General & Admin. Expense(SGA) was $263.5 Mil.
Total Current Liabilities was $91.3 Mil.
Long-Term Debt was $110.4 Mil.
Net Income was 9.464 + 7.686 + 7.735 + 8.845 = $33.7 Mil.
Non Operating Income was 0 + 0 + 0.457 + 0 = $0.5 Mil.
Cash Flow from Operations was 13.711 + 17.161 + 8.315 + 3.668 = $42.9 Mil.
|Accounts Receivable was $100.1 Mil.
Revenue was 200.172 + 193.079 + 193.371 + 187.713 = $774.3 Mil.
Gross Profit was 83.533 + 78.653 + 80.579 + 74.591 = $317.4 Mil.
Total Current Assets was $153.1 Mil.
Total Assets was $509.0 Mil.
Property, Plant and Equipment(Net PPE) was $34.8 Mil.
Depreciation, Depletion and Amortization(DDA) was $11.0 Mil.
Selling, General & Admin. Expense(SGA) was $239.2 Mil.
Total Current Liabilities was $76.4 Mil.
Long-Term Debt was $40.7 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)|
|=||(121.644 / 871.698)||/||(100.124 / 774.335)|
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)|
|=||(317.356 / 774.335)||/||(349.156 / 871.698)|
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 - (173.537 + 45.894) / 619.645)||/||(1 - (153.136 + 34.765) / 509.045)|
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))|
|=||(10.959 / (10.959 + 34.765))||/||(12.065 / (12.065 + 45.894))|
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)|
|=||(263.462 / 871.698)||/||(239.191 / 774.335)|
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)|
|=||((110.423 + 91.306) / 619.645)||/||((40.66 + 76.443) / 509.045)|
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|
|=||(33.73 - 0.457||-||42.855)||/||619.645|
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 -2.46 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
LHC Group Inc Annual Data
LHC Group Inc Quarterly Data