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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 -2.66.
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 * 1.0835||+||0.528 * 1.0033||+||0.404 * 1.0461||+||0.892 * 1.1085||+||0.115 * 0.9238|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.966||+||4.679 * -0.0373||-||0.327 * 1.3279|
|This Year (Mar16) TTM:||Last Year (Mar15) TTM:|
|Accounts Receivable was $117.8 Mil.|
Revenue was 222.552 + 218.993 + 204.122 + 200.172 = $845.8 Mil.
Gross Profit was 86.951 + 90.053 + 83.249 + 83.533 = $343.8 Mil.
Total Current Assets was $145.2 Mil.
Total Assets was $582.9 Mil.
Property, Plant and Equipment(Net PPE) was $38.2 Mil.
Depreciation, Depletion and Amortization(DDA) was $12.2 Mil.
Selling, General & Admin. Expense(SGA) was $255.6 Mil.
Total Current Liabilities was $80.5 Mil.
Long-Term Debt was $96.5 Mil.
Net Income was 7.686 + 7.735 + 8.845 + 8.95 = $33.2 Mil.
Non Operating Income was 0 + 0.457 + 0 + 0 = $0.5 Mil.
Cash Flow from Operations was 17.161 + 8.315 + 3.668 + 25.347 = $54.5 Mil.
|Accounts Receivable was $98.0 Mil.
Revenue was 193.079 + 193.371 + 187.713 + 188.867 = $763.0 Mil.
Gross Profit was 78.653 + 80.579 + 74.591 + 77.34 = $311.2 Mil.
Total Current Assets was $134.0 Mil.
Total Assets was $491.0 Mil.
Property, Plant and Equipment(Net PPE) was $35.3 Mil.
Depreciation, Depletion and Amortization(DDA) was $10.2 Mil.
Selling, General & Admin. Expense(SGA) was $238.7 Mil.
Total Current Liabilities was $64.6 Mil.
Long-Term Debt was $47.7 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)|
|=||(117.761 / 845.839)||/||(98.041 / 763.03)|
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)|
|=||(311.163 / 763.03)||/||(343.786 / 845.839)|
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 - (145.184 + 38.191) / 582.853)||/||(1 - (133.985 + 35.309) / 490.964)|
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))|
|=||(10.162 / (10.162 + 35.309))||/||(12.187 / (12.187 + 38.191))|
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)|
|=||(255.571 / 845.839)||/||(238.664 / 763.03)|
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)|
|=||((96.485 + 80.499) / 582.853)||/||((47.719 + 64.55) / 490.964)|
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|
|=||(33.216 - 0.457||-||54.491)||/||582.853|
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 -2.57 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