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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 Life Storage Inc was 12.94. The lowest was -4.22. And the median was -2.48.
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 Life Storage 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 * 0.766||+||0.528 * 0.899||+||0.404 * 1.1249||+||0.892 * 1.2033||+||0.115 * 1.1452|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9221||+||4.679 * -0.0309||-||0.327 * 1.0165|
|This Year (Sep16) TTM:||Last Year (Sep15) TTM:|
|Accounts Receivable was $6.0 Mil.|
Revenue was 127.801 + 107.005 + 99.124 + 95.039 = $429.0 Mil.
Gross Profit was 86.317 + 72.831 + 65.716 + 64.873 = $289.7 Mil.
Total Current Assets was $22.9 Mil.
Total Assets was $3,848.1 Mil.
Property, Plant and Equipment(Net PPE) was $3,689.0 Mil.
Depreciation, Depletion and Amortization(DDA) was $91.2 Mil.
Selling, General & Admin. Expense(SGA) was $41.7 Mil.
Total Current Liabilities was $72.2 Mil.
Long-Term Debt was $1,637.3 Mil.
Net Income was -4.738 + 43.456 + 28.339 + 30.037 = $97.1 Mil.
Non Operating Income was 0.882 + 16.268 + 0.915 + 0.482 = $18.5 Mil.
Cash Flow from Operations was 56.44 + 55.006 + 37.923 + 48.157 = $197.5 Mil.
|Accounts Receivable was $6.5 Mil.
Revenue was 95.428 + 90.726 + 85.408 + 84.93 = $356.5 Mil.
Gross Profit was 65.227 + 62.095 + 55.929 + 33.22 = $216.5 Mil.
Total Current Assets was $19.1 Mil.
Total Assets was $2,106.8 Mil.
Property, Plant and Equipment(Net PPE) was $2,021.4 Mil.
Depreciation, Depletion and Amortization(DDA) was $57.4 Mil.
Selling, General & Admin. Expense(SGA) was $37.6 Mil.
Total Current Liabilities was $54.6 Mil.
Long-Term Debt was $866.0 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)|
|=||(5.973 / 428.969)||/||(6.48 / 356.492)|
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)|
|=||(216.471 / 356.492)||/||(289.737 / 428.969)|
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 - (22.866 + 3688.973) / 3848.116)||/||(1 - (19.127 + 2021.359) / 2106.812)|
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))|
|=||(57.406 / (57.406 + 2021.359))||/||(91.151 / (91.151 + 3688.973))|
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)|
|=||(41.687 / 428.969)||/||(37.57 / 356.492)|
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)|
|=||((1637.253 + 72.151) / 3848.116)||/||((866.028 + 54.621) / 2106.812)|
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|
|=||(97.094 - 18.547||-||197.526)||/||3848.116|
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.
Life Storage Inc has a M-score of -2.64 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
Life Storage Inc Annual Data
Life Storage Inc Quarterly Data