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GuruFocus has detected 4 Warning Signs with LHC Group Inc $LHCG.
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LHC Group Inc (NAS:LHCG)
Beneish M-Score
-2.70 (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.

LHC Group Inc has a M-score of -2.70 suggests that the company is not a manipulator.

LHCG' s Beneish M-Score Range Over the Past 10 Years
Min: -3.68   Max: -1.59
Current: -2.7

-3.68
-1.59

During the past 13 years, the highest Beneish M-Score of LHC Group Inc was -1.59. The lowest was -3.68. And the median was -2.65.


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 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 * 0.9598+0.528 * 1.0528+0.404 * 0.9818+0.892 * 1.11+0.115 * 1.0824
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.975+4.679 * -0.0732-0.327 * 0.9103
=-2.70

* 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 $125.5 Mil.
Revenue was 246.618 + 235.443 + 230.797 + 226.031 = $938.9 Mil.
Gross Profit was 92.248 + 91.354 + 89.965 + 88.903 = $362.5 Mil.
Total Current Assets was $167.1 Mil.
Total Assets was $642.7 Mil.
Property, Plant and Equipment(Net PPE) was $43.1 Mil.
Depreciation, Depletion and Amortization(DDA) was $12.4 Mil.
Selling, General & Admin. Expense(SGA) was $276.6 Mil.
Total Current Liabilities was $99.2 Mil.
Long-Term Debt was $78.5 Mil.
Net Income was 9.467 + 9.817 + 9.616 + 9.464 = $38.4 Mil.
Non Operating Income was 0 + 0.492 + 0 + 0 = $0.5 Mil.
Cash Flow from Operations was 34.631 + 9.629 + 26.971 + 13.711 = $84.9 Mil.
Accounts Receivable was $117.8 Mil.
Revenue was 222.552 + 218.993 + 204.122 + 200.172 = $845.8 Mil.
Gross Profit was 86.951 + 90.053 + 83.249 + 83.533 = $343.8 Mil.
Total Current Assets was $145.2 Mil.
Total Assets was $582.9 Mil.
Property, Plant and Equipment(Net PPE) was $38.2 Mil.
Depreciation, Depletion and Amortization(DDA) was $12.2 Mil.
Selling, General & Admin. Expense(SGA) was $255.6 Mil.
Total Current Liabilities was $80.5 Mil.
Long-Term Debt was $96.5 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)
=(125.455 / 938.889) / (117.761 / 845.839)
=0.13362069 / 0.13922389
=0.9598

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)
=(343.786 / 845.839) / (362.47 / 938.889)
=0.40644378 / 0.38606268
=1.0528

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 - (167.132 + 43.088) / 642.725) / (1 - (145.184 + 38.191) / 582.853)
=0.67292388 / 0.68538379
=0.9818

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
=938.889 / 845.839
=1.11

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))
=(12.187 / (12.187 + 38.191)) / (12.402 / (12.402 + 43.088))
=0.24191115 / 0.22349973
=1.0824

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)
=(276.597 / 938.889) / (255.571 / 845.839)
=0.29460032 / 0.30215088
=0.975

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)
=((78.476 + 99.177) / 642.725) / ((96.485 + 80.499) / 582.853)
=0.27640593 / 0.30365118
=0.9103

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
=(38.364 - 0.492 - 84.942) / 642.725
=-0.0732

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 -2.70 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.

LHC Group Inc Annual Data

Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15Dec16
DSRI 1.0110.68310.86250.91061.14110.91531.02640.98341.01711.0093
GMI 1.00330.95231.04281.02321.08161.04181.02121.02480.99131.0526
AQI 1.36131.31941.03271.00990.92821.05441.01311.05551.05110.9975
SGI 1.38461.28611.38791.19370.99821.00581.03251.11451.11281.1206
DEPI 0.88251.04531.00940.84541.03571.00760.98890.97980.90331.0884
SGAI 1.08440.99140.90850.98481.36790.74181.00850.98030.95510.9713
LVGI 0.87461.55120.84170.77651.61770.82881.01321.26411.20510.918
TATA 0.0366-0.23310.029-0.067-0.0294-0.1228-0.0564-0.0347-0.0496-0.0511
M-score -1.79-3.68-2.02-2.63-2.74-2.98-2.68-2.61-2.65-2.53

LHC Group Inc Quarterly Data

Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16Dec16Mar17
DSRI 0.98341.0040.89210.95931.01711.08351.07920.98171.00930.9598
GMI 1.02481.01231.00270.99120.99131.00331.02321.04081.05261.0528
AQI 1.05550.95230.99210.87281.05111.04611.02381.17030.99750.9818
SGI 1.11451.15611.13441.12081.11281.10851.12571.13611.12061.11
DEPI 0.97980.96690.88840.93640.90330.92381.15141.05241.08841.0824
SGAI 0.98030.95070.94810.9460.95510.96610.97760.98220.9720.975
LVGI 1.26410.86710.79121.06451.20511.32791.41521.00920.9180.9103
TATA -0.0347-0.0628-0.0701-0.0471-0.0496-0.0373-0.0155-0.0523-0.0511-0.0732
M-score -2.61-2.60-2.72-2.71-2.65-2.57-2.46-2.52-2.53-2.70
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