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LHC Group, Inc. (NAS:LHCG)
Beneish M-Score
-2.69 (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 -2.69 suggests that the company is not a manipulator.

LHCG' s 10-Year Beneish M-Score Range
Min: -3.42   Max: -1.85
Current: -2.69

-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 * 1.021+0.528 * 1.0212+0.404 * 1.0131+0.892 * 1.0325+0.115 * 0.9889
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0085+4.679 * -0.0564-0.327 * 1.0132
=-2.69

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

This Year (Dec13) TTM:Last Year (Dec12) TTM:
Accounts Receivable was $90.8 Mil.
Revenue was 165.28 + 164.748 + 166.302 + 161.953 = $658.3 Mil.
Gross Profit was 70.039 + 66.782 + 69.293 + 68.705 = $274.8 Mil.
Total Current Assets was $129.6 Mil.
Total Assets was $422.2 Mil.
Property, Plant and Equipment(Net PPE) was $31.1 Mil.
Depreciation, Depletion and Amortization(DDA) was $8.3 Mil.
Selling, General & Admin. Expense(SGA) was $214.1 Mil.
Total Current Liabilities was $59.6 Mil.
Long-Term Debt was $23.0 Mil.
Net Income was 4.969 + 5.297 + 5.79 + 6.286 = $22.3 Mil.
Non Operating Income was 0.059 + 0.054 + 0.065 + 0.065 = $0.2 Mil.
Cash Flow from Operations was 19.535 + -1.69 + 14.001 + 14.069 = $45.9 Mil.
Accounts Receivable was $86.1 Mil.
Revenue was 161.827 + 158.926 + 158.055 + 158.761 = $637.6 Mil.
Gross Profit was 69.386 + 67.692 + 65.837 + 68.902 = $271.8 Mil.
Total Current Assets was $120.7 Mil.
Total Assets was $386.9 Mil.
Property, Plant and Equipment(Net PPE) was $29.5 Mil.
Depreciation, Depletion and Amortization(DDA) was $7.8 Mil.
Selling, General & Admin. Expense(SGA) was $205.6 Mil.
Total Current Liabilities was $55.2 Mil.
Long-Term Debt was $19.5 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)
=(90.806 / 658.283) / (86.136 / 637.569)
=0.13794371 / 0.13510067
=1.021

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)
=(66.782 / 637.569) / (70.039 / 658.283)
=0.42633346 / 0.4174785
=1.0212

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 - (129.555 + 31.052) / 422.226) / (1 - (120.73 + 29.531) / 386.894)
=0.6196184 / 0.6116223
=1.0131

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
=658.283 / 637.569
=1.0325

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))
=(7.806 / (7.806 + 29.531)) / (8.325 / (8.325 + 31.052))
=0.20906875 / 0.21141783
=0.9889

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)
=(214.133 / 658.283) / (205.637 / 637.569)
=0.32529019 / 0.32253293
=1.0085

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)
=((22.963 + 59.646) / 422.226) / ((19.5 + 55.21) / 386.894)
=0.19565114 / 0.19310199
=1.0132

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
=(22.342 - 0.243 - 45.915) / 422.226
=-0.0564

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 -2.69 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

Sep11Dec11Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13
DSRI 0.93491.08431.14921.1571.13770.91950.87120.94181.00231.021
GMI 1.06311.08751.07531.09311.06821.04181.03811.00941.02091.0212
AQI 0.95460.92820.97430.98691.05661.05441.06681.05511.04171.0131
SGI 1.06161.00360.97330.95780.98471.00581.01571.03361.03381.0325
DEPI 0.87091.03571.02881.03031.06911.00761.00891.01930.99470.9889
SGAI 1.05671.36041.32111.32111.27460.74190.74860.75020.75271.0085
LVGI 1.64931.61771.24991.31320.75710.82881.08761.22450.98931.0132
TATA -0.0215-0.0292-0.0492-0.0552-0.086-0.1228-0.0948-0.0905-0.069-0.0564
M-score -2.81-2.78-2.70-2.74-2.67-2.98-2.97-2.93-2.70-2.69
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