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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.
Estee Lauder Cos Inc has a M-score of -2.53 suggests that the company is not a manipulator.
During the past 13 years, the highest Beneish M-Score of Estee Lauder Cos Inc was -2.21. The lowest was -3.08. And the median was -2.56.
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 Estee Lauder Cos 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 * 1.0927||+||0.528 * 0.9972||+||0.404 * 0.9345||+||0.892 * 1.0773||+||0.115 * 0.9796|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.983||+||4.679 * -0.0421||-||0.327 * 0.9417|
|This Year (Jun14) TTM:||Last Year (Jun13) TTM:|
|Accounts Receivable was $1,379 Mil.|
Revenue was 2725.3 + 2549.8 + 3018.7 + 2675 = $10,969 Mil.
Gross Profit was 2191.5 + 2051.1 + 2437.1 + 2130.9 = $8,811 Mil.
Total Current Assets was $4,825 Mil.
Total Assets was $7,869 Mil.
Property, Plant and Equipment(Net PPE) was $1,503 Mil.
Depreciation, Depletion and Amortization(DDA) was $385 Mil.
Selling, General & Admin. Expense(SGA) was $6,986 Mil.
Total Current Liabilities was $2,057 Mil.
Long-Term Debt was $1,325 Mil.
Net Income was 257.7 + 213.2 + 432.5 + 300.7 = $1,204 Mil.
Non Operating Income was 0 + 0 + 0 + 0 = $0 Mil.
Cash Flow from Operations was 365.8 + 387 + 752.5 + 29.9 = $1,535 Mil.
|Accounts Receivable was $1,172 Mil.
Revenue was 2407.4 + 2291.8 + 2933 + 2549.5 = $10,182 Mil.
Gross Profit was 1931.8 + 1848.7 + 2365 + 2010.3 = $8,156 Mil.
Total Current Assets was $4,297 Mil.
Total Assets was $7,145 Mil.
Property, Plant and Equipment(Net PPE) was $1,351 Mil.
Depreciation, Depletion and Amortization(DDA) was $337 Mil.
Selling, General & Admin. Expense(SGA) was $6,597 Mil.
Total Current Liabilities was $1,935 Mil.
Long-Term Debt was $1,326 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)|
|=||(1379.3 / 10968.8)||/||(1171.7 / 10181.7)|
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)|
|=||(2051.1 / 10181.7)||/||(2191.5 / 10968.8)|
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 - (4825.2 + 1502.6) / 7868.8)||/||(1 - (4297.2 + 1350.7) / 7145.2)|
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))|
|=||(336.9 / (336.9 + 1350.7))||/||(384.6 / (384.6 + 1502.6))|
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)|
|=||(6985.9 / 10968.8)||/||(6597 / 10181.7)|
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)|
|=||((1324.7 + 2056.7) / 7868.8)||/||((1326 + 1934.6) / 7145.2)|
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|
|=||(1204.1 - 0||-||1535.2)||/||7868.8|
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.
Estee Lauder Cos Inc has a M-score of -2.53 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
Estee Lauder Cos Inc Annual Data
Estee Lauder Cos Inc Quarterly Data