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GuruFocus has detected 2 Warning Signs with Lydall Inc $LDL.
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Lydall Inc (NYSE:LDL)
Beneish M-Score
-2.03 (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.

Lydall Inc has a M-score of -2.03 signals that the company is a manipulator.

LDL' s Beneish M-Score Range Over the Past 10 Years
Min: -3.18   Max: -1.83
Current: -2.03

-3.18
-1.83

During the past 13 years, the highest Beneish M-Score of Lydall Inc was -1.83. The lowest was -3.18. And the median was -2.66.


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 Lydall 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 * 1.0466+0.528 * 0.9923+0.404 * 3.0922+0.892 * 1.1437+0.115 * 1.0741
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.1132+4.679 * -0.0567-0.327 * 1.8827
=-2.03

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

This Year (Mar17) TTM:Last Year (Mar16) TTM:
Accounts Receivable was $111.7 Mil.
Revenue was 165.487 + 144.192 + 155.725 + 137.235 = $602.6 Mil.
Gross Profit was 40.424 + 31.982 + 38.193 + 35.99 = $146.6 Mil.
Total Current Assets was $267.5 Mil.
Total Assets was $538.5 Mil.
Property, Plant and Equipment(Net PPE) was $160.5 Mil.
Depreciation, Depletion and Amortization(DDA) was $21.7 Mil.
Selling, General & Admin. Expense(SGA) was $90.5 Mil.
Total Current Liabilities was $99.1 Mil.
Long-Term Debt was $118.1 Mil.
Net Income was 11.669 + 4.42 + 12.785 + 10.813 = $39.7 Mil.
Non Operating Income was -0.14 + 0.331 + 0.218 + 0.499 = $0.9 Mil.
Cash Flow from Operations was 12.358 + 22.305 + 14.015 + 20.624 = $69.3 Mil.
Accounts Receivable was $93.3 Mil.
Revenue was 129.7 + 131.398 + 131.24 + 134.561 = $526.9 Mil.
Gross Profit was 32.377 + 29.217 + 31.691 + 33.889 = $127.2 Mil.
Total Current Assets was $221.6 Mil.
Total Assets was $363.0 Mil.
Property, Plant and Equipment(Net PPE) was $117.3 Mil.
Depreciation, Depletion and Amortization(DDA) was $17.2 Mil.
Selling, General & Admin. Expense(SGA) was $71.1 Mil.
Total Current Liabilities was $67.6 Mil.
Long-Term Debt was $10.1 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)
=(111.662 / 602.639) / (93.279 / 526.899)
=0.18528837 / 0.17703393
=1.0466

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)
=(127.174 / 526.899) / (146.589 / 602.639)
=0.24136315 / 0.24324513
=0.9923

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 - (267.477 + 160.521) / 538.517) / (1 - (221.555 + 117.331) / 362.977)
=0.20522843 / 0.0663706
=3.0922

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
=602.639 / 526.899
=1.1437

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))
=(17.245 / (17.245 + 117.331)) / (21.744 / (21.744 + 160.521))
=0.12814321 / 0.11929882
=1.0741

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)
=(90.521 / 602.639) / (71.096 / 526.899)
=0.15020767 / 0.13493288
=1.1132

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)
=((118.098 + 99.074) / 538.517) / ((10.145 + 67.605) / 362.977)
=0.40327789 / 0.2142009
=1.8827

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
=(39.687 - 0.908 - 69.302) / 538.517
=-0.0567

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.

Lydall Inc has a M-score of -2.03 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.

Lydall Inc Annual Data

Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15Dec16
DSRI 0.95760.72581.46730.92030.8381.01721.04871.19810.99471.1637
GMI 0.9881.10161.53760.78260.96640.85710.95880.9980.91880.9556
AQI 0.88751.01060.85510.86350.90760.87610.90561.06690.7483.0665
SGI 1.07890.95390.79021.28641.19780.98781.05031.34640.97891.0807
DEPI 1.03930.91870.93041.03570.90571.01871.09661.04571.01151.2094
SGAI 0.9971.00491.14020.81920.82581.09460.94011.06360.88391.1067
LVGI 0.9720.84121.11431.21590.82760.95220.95031.73110.72271.8309
TATA -0.0509-0.1072-0.1283-0.0353-0.0041-0.0697-0.0403-0.0566-0.0255-0.064
M-score -2.72-3.18-2.68-2.67-2.45-2.93-2.60-2.47-2.66-2.01

Lydall Inc Quarterly Data

Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16Dec16Mar17
DSRI 1.19810.71370.83350.9760.99471.04360.9761.12961.16371.0466
GMI 0.9980.98050.97510.94630.91880.89720.90520.93140.95560.9923
AQI 1.06690.8420.83930.8450.7480.88020.87072.11783.06653.0922
SGI 1.34641.26821.10971.02470.97890.97951.01131.06411.08071.1437
DEPI 1.04570.71930.82930.92211.01151.10331.07431.24351.20941.0741
SGAI 1.06361.0470.97920.85580.88390.90750.98811.06171.10671.1132
LVGI 1.73110.88860.82980.84160.72270.66340.7311.24161.83091.8827
TATA -0.0566-0.073-0.03540.0022-0.0255-0.0366-0.0787-0.0645-0.064-0.0567
M-score -2.47-2.92-2.74-2.49-2.66-2.59-2.86-2.25-2.01-2.03
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