Switch to:
Legg Mason Inc (NYSE:LM)
Beneish M-Score
-2.27 (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.

Legg Mason Inc has a M-score of -0.45 signals that the company is a manipulator.

LM' s Beneish M-Score Range Over the Past 10 Years
Min: -3.83   Max: -1.61
Current: -2.27

-3.83
-1.61

During the past 13 years, the highest Beneish M-Score of Legg Mason Inc was -1.61. The lowest was -3.83. And the median was -2.70.


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 Legg Mason 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 * 1.32+0.528 * 5.1936+0.404 * 1.0842+0.892 * 0.9731+0.115 * 0.7848
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0653+4.679 * -0.0655-0.327 * 1.4605
=-0.45

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

This Year (Sep16) TTM:Last Year (Sep15) TTM:
Accounts Receivable was $426 Mil.
Revenue was 748.37 + 700.165 + 619.551 + 659.557 = $2,728 Mil.
Gross Profit was 0 + 0 + 0 + 659.557 = $660 Mil.
Total Current Assets was $1,661 Mil.
Total Assets was $8,255 Mil.
Property, Plant and Equipment(Net PPE) was $166 Mil.
Depreciation, Depletion and Amortization(DDA) was $73 Mil.
Selling, General & Admin. Expense(SGA) was $2,183 Mil.
Total Current Liabilities was $681 Mil.
Long-Term Debt was $2,222 Mil.
Net Income was 66.441 + 33.452 + -45.273 + -138.626 = $-84 Mil.
Non Operating Income was 15.181 + 9.813 + -13.935 + 5.01 = $16 Mil.
Cash Flow from Operations was 303.829 + -165.97 + 148.059 + 154.684 = $441 Mil.
Accounts Receivable was $332 Mil.
Revenue was 673.086 + 708.65 + 702.346 + 718.984 = $2,803 Mil.
Gross Profit was 0 + 0 + 2801.178 + 718.984 = $3,520 Mil.
Total Current Assets was $1,766 Mil.
Total Assets was $6,878 Mil.
Property, Plant and Equipment(Net PPE) was $173 Mil.
Depreciation, Depletion and Amortization(DDA) was $55 Mil.
Selling, General & Admin. Expense(SGA) was $2,106 Mil.
Total Current Liabilities was $596 Mil.
Long-Term Debt was $1,060 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)
=(425.948 / 2727.643) / (331.602 / 2803.066)
=0.15615973 / 0.11829975
=1.32

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)
=(3520.162 / 2803.066) / (659.557 / 2727.643)
=1.25582559 / 0.24180474
=5.1936

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 - (1661.476 + 165.765) / 8254.55) / (1 - (1765.54 + 172.822) / 6877.954)
=0.77863833 / 0.71817753
=1.0842

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
=2727.643 / 2803.066
=0.9731

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))
=(54.635 / (54.635 + 172.822)) / (73.105 / (73.105 + 165.765))
=0.24019925 / 0.30604513
=0.7848

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)
=(2183.265 / 2727.643) / (2106.199 / 2803.066)
=0.80042183 / 0.75139116
=1.0653

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)
=((2221.896 + 681.345) / 8254.55) / ((1059.902 + 596.459) / 6877.954)
=0.35171402 / 0.24082176
=1.4605

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
=(-84.006 - 16.069 - 440.602) / 8254.55
=-0.0655

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.

Legg Mason Inc has a M-score of -0.45 signals that the company is likely to 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 local exchange's currency.

Legg Mason Inc Annual Data

Mar07Mar08Mar09Mar10Mar11Mar12Mar13Mar14Mar15Mar16
DSRI 2.1720.36970.99330.95221.07090.94721.0277
GMI 1111111
AQI 1.13211.01651.03760.9981.02950.95611.0424
SGI 0.72450.78481.05670.95630.98121.04941.0282
DEPI 1.24861.14260.90860.93720.92821.21651.0621
SGAI 1.091.08220.97960.98911.03470.94920.9805
LVGI 1.12650.59211.09240.99060.99010.94851.0087
TATA 0.0016-0.155-0.0252-0.037-0.0875-0.0264-0.0356
M-score -1.61-3.83-2.58-2.74-2.84-2.58-2.57

Legg Mason Inc Quarterly Data

Jun14Sep14Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16
DSRI 0.96440.96070.93041.02771.01740.96160.94090.96321.23541.32
GMI 1110.57320.67090.79630.79287.03785.99425.1936
AQI 0.88060.97681.01851.04241.13461.01941.00210.9411.06221.0842
SGI 1.04251.04371.02571.02821.02481.00140.98050.94390.93590.9731
DEPI 1.2221.23751.3321.06211.0341.02610.89740.87040.84440.7848
SGAI 0.94120.94390.95470.98050.99510.99870.99371.03511.05121.0653
LVGI 1.16250.9490.94071.00870.78330.99551.01711.30161.4951.4605
TATA -0.0322-0.0241-0.0277-0.0356-0.0347-0.0385-0.0558-0.0593-0.0413-0.0655
M-score -2.69-2.55-2.58-2.80-2.65-2.79-2.940.20-0.04-0.45
Get WordPress Plugins for easy affiliate links on Stock Tickers and Guru Names | Earn affiliate commissions by embedding GuruFocus Charts
GuruFocus Affiliate Program: Earn up to $400 per referral. ( Learn More)
FEEDBACK