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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 -1.80. The lowest was -3.43. And the median was -2.67.
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 * 1.0007||+||0.528 * 1.0246||+||0.404 * 1.0277||+||0.892 * 1.0774||+||0.115 * 0.9627|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0068||+||4.679 * -0.0644||-||0.327 * 1.4024|
|This Year (Sep14) TTM:||Last Year (Sep13) TTM:|
|Accounts Receivable was $99.7 Mil.|
Revenue was 187.713 + 188.867 + 163.681 + 165.28 = $705.5 Mil.
Gross Profit was 74.591 + 77.34 + 66.347 + 70.039 = $288.3 Mil.
Total Current Assets was $137.7 Mil.
Total Assets was $495.6 Mil.
Property, Plant and Equipment(Net PPE) was $33.8 Mil.
Depreciation, Depletion and Amortization(DDA) was $9.2 Mil.
Selling, General & Admin. Expense(SGA) was $228.0 Mil.
Total Current Liabilities was $70.1 Mil.
Long-Term Debt was $64.8 Mil.
Net Income was 6.174 + 6.061 + 4.068 + 4.969 = $21.3 Mil.
Non Operating Income was 0.235 + -0.109 + 0.033 + 0.059 = $0.2 Mil.
Cash Flow from Operations was 9.655 + 17.693 + 6.103 + 19.535 = $53.0 Mil.
|Accounts Receivable was $92.4 Mil.
Revenue was 164.748 + 166.302 + 161.953 + 161.827 = $654.8 Mil.
Gross Profit was 66.782 + 69.293 + 68.705 + 69.386 = $274.2 Mil.
Total Current Assets was $120.0 Mil.
Total Assets was $414.0 Mil.
Property, Plant and Equipment(Net PPE) was $30.6 Mil.
Depreciation, Depletion and Amortization(DDA) was $8.0 Mil.
Selling, General & Admin. Expense(SGA) was $210.2 Mil.
Total Current Liabilities was $55.2 Mil.
Long-Term Debt was $25.1 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)|
|=||(99.652 / 705.541)||/||(92.423 / 654.83)|
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)|
|=||(77.34 / 654.83)||/||(74.591 / 705.541)|
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 - (137.713 + 33.798) / 495.631)||/||(1 - (120.007 + 30.561) / 414.033)|
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))|
|=||(7.963 / (7.963 + 30.561))||/||(9.241 / (9.241 + 33.798))|
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)|
|=||(227.964 / 705.541)||/||(210.151 / 654.83)|
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)|
|=||((64.818 + 70.102) / 495.631)||/||((25.138 + 55.231) / 414.033)|
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|
|=||(21.272 - 0.218||-||52.986)||/||495.631|
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 -2.82 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