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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 -2.65.
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 * 1.0171||+||0.528 * 0.9913||+||0.404 * 1.0511||+||0.892 * 1.1128||+||0.115 * 0.9033|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9551||+||4.679 * -0.0496||-||0.327 * 1.2051|
|This Year (Dec15) TTM:||Last Year (Dec14) TTM:|
|Accounts Receivable was $110.4 Mil.|
Revenue was 218.993 + 204.122 + 200.172 + 193.079 = $816.4 Mil.
Gross Profit was 90.053 + 83.249 + 83.533 + 78.653 = $335.5 Mil.
Total Current Assets was $138.8 Mil.
Total Assets was $566.1 Mil.
Property, Plant and Equipment(Net PPE) was $38.1 Mil.
Depreciation, Depletion and Amortization(DDA) was $12.0 Mil.
Selling, General & Admin. Expense(SGA) was $248.6 Mil.
Total Current Liabilities was $70.2 Mil.
Long-Term Debt was $98.5 Mil.
Net Income was 7.735 + 8.845 + 8.95 + 6.805 = $32.3 Mil.
Non Operating Income was 0.457 + 0 + 0 + 0 = $0.5 Mil.
Cash Flow from Operations was 8.315 + 3.668 + 25.347 + 22.604 = $59.9 Mil.
|Accounts Receivable was $97.5 Mil.
Revenue was 193.371 + 187.713 + 188.867 + 163.681 = $733.6 Mil.
Gross Profit was 80.579 + 74.591 + 77.34 + 66.347 = $298.9 Mil.
Total Current Assets was $135.4 Mil.
Total Assets was $491.7 Mil.
Property, Plant and Equipment(Net PPE) was $34.8 Mil.
Depreciation, Depletion and Amortization(DDA) was $9.6 Mil.
Selling, General & Admin. Expense(SGA) was $233.9 Mil.
Total Current Liabilities was $60.8 Mil.
Long-Term Debt was $60.8 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)|
|=||(110.35 / 816.366)||/||(97.498 / 733.632)|
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)|
|=||(83.249 / 733.632)||/||(90.053 / 816.366)|
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 - (138.83 + 38.096) / 566.054)||/||(1 - (135.352 + 34.787) / 491.739)|
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))|
|=||(9.571 / (9.571 + 34.787))||/||(11.955 / (11.955 + 38.096))|
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)|
|=||(248.629 / 816.366)||/||(233.945 / 733.632)|
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)|
|=||((98.543 + 70.166) / 566.054)||/||((60.778 + 60.842) / 491.739)|
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|
|=||(32.335 - 0.457||-||59.934)||/||566.054|
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 -2.65 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