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GuruFocus has detected 7 Warning Signs with Life Storage Inc $LSI.
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Life Storage Inc (NYSE:LSI)
Beneish M-Score
-2.43 (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.

Life Storage Inc has a M-score of -2.43 suggests that the company is not a manipulator.

LSI' s Beneish M-Score Range Over the Past 10 Years
Min: -4.22   Max: 12.94
Current: -2.43

-4.22
12.94

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.


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 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 * 1.0579+0.528 * 1.0087+0.404 * 0.9858+0.892 * 1.2931+0.115 * 0.701
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.8582+4.679 * -0.0409-0.327 * 1.1909
=-2.43

* 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 $5.8 Mil.
Revenue was 128.32 + 128.679 + 127.801 + 107.005 = $491.8 Mil.
Gross Profit was 98.524 + 86.481 + 86.317 + 72.831 = $344.2 Mil.
Total Current Assets was $11.9 Mil.
Total Assets was $3,857.6 Mil.
Property, Plant and Equipment(Net PPE) was $3,713.6 Mil.
Depreciation, Depletion and Amortization(DDA) was $138.3 Mil.
Selling, General & Admin. Expense(SGA) was $44.1 Mil.
Total Current Liabilities was $55.5 Mil.
Long-Term Debt was $1,699.9 Mil.
Net Income was 20.429 + 18.167 + -4.738 + 43.456 = $77.3 Mil.
Non Operating Income was 0.721 + 1.493 + 0.882 + 16.268 = $19.4 Mil.
Cash Flow from Operations was 28.029 + 76.181 + 56.44 + 55.006 = $215.7 Mil.
Accounts Receivable was $4.2 Mil.
Revenue was 99.124 + 95.039 + 95.428 + 90.726 = $380.3 Mil.
Gross Profit was 76.263 + 64.873 + 65.227 + 62.095 = $268.5 Mil.
Total Current Assets was $11.2 Mil.
Total Assets was $2,449.5 Mil.
Property, Plant and Equipment(Net PPE) was $2,353.1 Mil.
Depreciation, Depletion and Amortization(DDA) was $60.8 Mil.
Selling, General & Admin. Expense(SGA) was $39.7 Mil.
Total Current Liabilities was $46.2 Mil.
Long-Term Debt was $889.8 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)
=(5.75 / 491.805) / (4.203 / 380.317)
=0.01169163 / 0.01105131
=1.0579

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)
=(268.458 / 380.317) / (344.153 / 491.805)
=0.70587957 / 0.69977532
=1.0087

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 - (11.865 + 3713.61) / 3857.633) / (1 - (11.235 + 2353.127) / 2449.483)
=0.03425883 / 0.0347506
=0.9858

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
=491.805 / 380.317
=1.2931

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))
=(60.75 / (60.75 + 2353.127)) / (138.298 / (138.298 + 3713.61))
=0.02516698 / 0.03590377
=0.701

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)
=(44.076 / 491.805) / (39.717 / 380.317)
=0.08962089 / 0.1044313
=0.8582

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)
=((1699.891 + 55.535) / 3857.633) / ((889.79 + 46.203) / 2449.483)
=0.45505262 / 0.38211859
=1.1909

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
=(77.314 - 19.364 - 215.656) / 3857.633
=-0.0409

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 -2.43 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.

Life Storage Inc Annual Data

Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15Dec16
DSRI 1.1111.04140.83191.03231.11061.02171.27470.94351.05120.6369
GMI 1.22531.12351.14710.99990.85431.00051.20540.98960.91770.9727
AQI 0.19371.89720.93730.97283.12150.57650.8271.28680.92210.8497
SGI 1.16111.02110.97310.95751.11291.1451.16841.19221.12431.2619
DEPI 0.87381.00691.02651.02440.98410.99850.96821.03651.01440.9166
SGAI 0.93081.11091.10921.18631.10231.0860.79820.98030.97630.8836
LVGI 1.57811.08890.75150.86271.33260.9930.87651.06970.90731.0812
TATA -0.0407-0.0332-0.0339-0.0281-0.0375-0.0305-0.0313-0.0349-0.0361-0.0414
M-score -2.82-2.20-2.70-2.62-1.80-2.66-2.11-2.43-2.53-2.87

Life Storage Inc Quarterly Data

Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16Dec16Mar17
DSRI 0.94351.02090.99631.00541.05120.64640.66150.7660.63691.0579
GMI 0.98960.98260.97711.02030.91770.88340.89110.86740.97271.0087
AQI 1.28681.3331.15811.0270.92210.93640.68491.12490.84970.9858
SGI 1.19221.17871.16051.13821.12431.13181.14521.20331.26191.2931
DEPI 1.03651.02030.98531.01131.01441.10261.08061.14520.91660.701
SGAI 0.98031.02481.0691.11890.97630.97230.94960.92210.88360.8582
LVGI 1.06970.97620.94640.96910.90730.88470.83091.01651.08121.1909
TATA -0.0349-0.0361-0.0353-0.0354-0.0361-0.0318-0.0244-0.0309-0.0414-0.0409
M-score -2.43-2.34-2.45-2.50-2.53-2.87-2.89-2.65-2.87-2.43
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