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GuruFocus has detected 2 Warning Signs with Layne Christensen Co $LAYN.
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Layne Christensen Co (NAS:LAYN)
Beneish M-Score
-3.47 (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.

Layne Christensen Co has a M-score of -3.47 suggests that the company is not a manipulator.

LAYN' s Beneish M-Score Range Over the Past 10 Years
Min: -4.15   Max: 0.37
Current: -3.47

-4.15
0.37

During the past 13 years, the highest Beneish M-Score of Layne Christensen Co was 0.37. The lowest was -4.15. And the median was -2.84.


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 Layne Christensen Co 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 * 0.8766+0.528 * 0.9689+0.404 * 1.1347+0.892 * 0.8798+0.115 * 1.063
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9909+4.679 * -0.1658-0.327 * 1.1172
=-3.47

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

This Year (Apr17) TTM:Last Year (Apr16) TTM:
Accounts Receivable was $70.0 Mil.
Revenue was 111.507 + 129.617 + 153.567 + 159.049 = $553.7 Mil.
Gross Profit was 25.224 + 14.235 + 27.622 + 28.695 = $95.8 Mil.
Total Current Assets was $209.0 Mil.
Total Assets was $392.7 Mil.
Property, Plant and Equipment(Net PPE) was $102.0 Mil.
Depreciation, Depletion and Amortization(DDA) was $27.3 Mil.
Selling, General & Admin. Expense(SGA) was $87.6 Mil.
Total Current Liabilities was $123.2 Mil.
Long-Term Debt was $163.2 Mil.
Net Income was -22.9 + -33.08 + -5.043 + -5.31 = $-66.3 Mil.
Non Operating Income was 0.732 + -12.166 + 1.795 + -0.374 = $-10.0 Mil.
Cash Flow from Operations was -9.756 + 1.203 + 14.081 + 3.265 = $8.8 Mil.
Accounts Receivable was $90.8 Mil.
Revenue was 120.646 + 159.243 + 173.179 + 176.317 = $629.4 Mil.
Gross Profit was 23.584 + 26.586 + 30.238 + 25.068 = $105.5 Mil.
Total Current Assets was $283.7 Mil.
Total Assets was $483.1 Mil.
Property, Plant and Equipment(Net PPE) was $110.8 Mil.
Depreciation, Depletion and Amortization(DDA) was $32.0 Mil.
Selling, General & Admin. Expense(SGA) was $100.5 Mil.
Total Current Liabilities was $155.6 Mil.
Long-Term Debt was $159.8 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)
=(69.999 / 553.74) / (90.761 / 629.385)
=0.12641131 / 0.14420585
=0.8766

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)
=(105.476 / 629.385) / (95.776 / 553.74)
=0.16758582 / 0.17296204
=0.9689

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 - (209.009 + 101.985) / 392.715) / (1 - (283.686 + 110.791) / 483.067)
=0.20809238 / 0.18339071
=1.1347

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
=553.74 / 629.385
=0.8798

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))
=(32.013 / (32.013 + 110.791)) / (27.254 / (27.254 + 101.985))
=0.22417439 / 0.21088062
=1.063

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)
=(87.592 / 553.74) / (100.472 / 629.385)
=0.15818254 / 0.1596352
=0.9909

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)
=((163.23 + 123.232) / 392.715) / ((159.797 + 155.611) / 483.067)
=0.72943992 / 0.65292806
=1.1172

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
=(-66.333 - -10.013 - 8.793) / 392.715
=-0.1658

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.

Layne Christensen Co has a M-score of -3.47 suggests that the company will not 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.

Layne Christensen Co Annual Data

Jan08Jan09Jan10Jan11Jan12Jan13Jan14Jan15Jan16Jan17
DSRI 0.64751.23851.22751.02910.64670.98710.77281.23460.97920.9382
GMI 0.97241.0611.05721.05781.03451.23411.05711.09350.91610.9887
AQI 1.03481.07491.0321.13410.64671.19811.06071.0510.80861.0521
SGI 1.20131.1610.85951.15411.11180.91210.78250.92810.92760.8241
DEPI 0.8860.84990.88821.16370.91520.94080.81910.87451.15081.1537
SGAI 0.9730.9661.08190.9691.04991.02141.09460.97650.98761.0267
LVGI 0.57210.90981.03041.03031.23581.14151.06741.21531.12971.0964
TATA -0.0749-0.1121-0.1225-0.0641-0.0116-0.0882-0.1803-0.1545-0.072-0.128
M-score -2.84-2.56-2.96-2.52-2.98-2.84-3.73-3.06-3.05-3.30

Layne Christensen Co Quarterly Data

Jan15Apr15Jul15Oct15Jan16Apr16Jul16Oct16Jan17Apr17
DSRI 1.23461.13890.85120.84830.97920.89651.12121.09290.93820.8766
GMI 1.09350.97040.96410.9880.91610.97190.89420.87280.98870.9689
AQI 1.0511.15611.17711.01830.80860.96270.83510.97471.05211.1347
SGI 0.92810.99311.03441.00170.92760.85490.84030.84340.82410.8798
DEPI 0.87450.85360.92571.00411.15081.10771.29361.21031.15371.063
SGAI 0.97650.96271.02891.11190.98761.02040.95750.94731.02670.9909
LVGI 1.21531.1441.11491.10031.12971.06471.04671.04691.09641.1172
TATA -0.1545-0.1647-0.0875-0.0537-0.072-0.0316-0.0674-0.106-0.128-0.1658
M-score -3.06-3.14-2.99-2.92-3.05-2.89-2.92-3.09-3.30-3.47
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