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The Estee Lauder Companies Inc (NYSE:EL)
Beneish M-Score
-2.74 (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.

The Estee Lauder Companies Inc has a M-score of -2.74 suggests that the company is not a manipulator.

EL' s Beneish M-Score Range Over the Past 10 Years
Min: -3.23   Max: -2.04
Current: -2.74

-3.23
-2.04

During the past 13 years, the highest Beneish M-Score of The Estee Lauder Companies Inc was -2.04. The lowest was -3.23. 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 The Estee Lauder Companies 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 * 1.0342+0.528 * 0.9979+0.404 * 1.2364+0.892 * 1.0145+0.115 * 1.0373
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0102+4.679 * -0.0794-0.327 * 1.0879
=-2.74

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.

This Year (Mar16) TTM:Last Year (Mar15) TTM:
Accounts Receivable was $1,417 Mil.
Revenue was 2656.5 + 3124.8 + 2834.7 + 2524.4 = $11,140 Mil.
Gross Profit was 2152.3 + 2535.8 + 2257.5 + 2036.4 = $8,982 Mil.
Total Current Assets was $4,252 Mil.
Total Assets was $8,816 Mil.
Property, Plant and Equipment(Net PPE) was $1,511 Mil.
Depreciation, Depletion and Amortization(DDA) was $416 Mil.
Selling, General & Admin. Expense(SGA) was $7,253 Mil.
Total Current Liabilities was $2,434 Mil.
Long-Term Debt was $1,613 Mil.
Net Income was 265.6 + 446.2 + 309.3 + 153 = $1,174 Mil.
Non Operating Income was 0 + 0 + 0 + 0 = $0 Mil.
Cash Flow from Operations was 353.9 + 954.1 + 8.2 + 558.3 = $1,875 Mil.
Accounts Receivable was $1,350 Mil.
Revenue was 2580.5 + 3044.5 + 2631 + 2725.3 = $10,981 Mil.
Gross Profit was 2077.6 + 2471.4 + 2094.4 + 2191.5 = $8,835 Mil.
Total Current Assets was $4,429 Mil.
Total Assets was $8,095 Mil.
Property, Plant and Equipment(Net PPE) was $1,398 Mil.
Depreciation, Depletion and Amortization(DDA) was $403 Mil.
Selling, General & Admin. Expense(SGA) was $7,077 Mil.
Total Current Liabilities was $2,097 Mil.
Long-Term Debt was $1,318 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)
=(1416.6 / 11140.4) / (1350.2 / 10981.3)
=0.12715881 / 0.12295448
=1.0342

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)
=(8834.9 / 10981.3) / (8982 / 11140.4)
=0.80454045 / 0.80625471
=0.9979

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 - (4252.3 + 1510.5) / 8816.3) / (1 - (4429.2 + 1398.2) / 8095.1)
=0.34634711 / 0.28013243
=1.2364

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
=11140.4 / 10981.3
=1.0145

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))
=(403.2 / (403.2 + 1398.2)) / (415.6 / (415.6 + 1510.5))
=0.22382591 / 0.21577281
=1.0373

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)
=(7253.4 / 11140.4) / (7077.4 / 10981.3)
=0.65108973 / 0.64449564
=1.0102

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)
=((1612.5 + 2433.7) / 8816.3) / ((1317.5 + 2097.4) / 8095.1)
=0.45894536 / 0.42184778
=1.0879

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
=(1174.1 - 0 - 1874.5) / 8816.3
=-0.0794

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.

The Estee Lauder Companies Inc has a M-score of -2.74 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 own currency.

The Estee Lauder Companies Inc Annual Data

Jun06Jun07Jun08Jun09Jun10Jun11Jun12Jun13Jun14Jun15
DSRI 0.97351.02481.07390.88730.82151.12131.0171.05431.09270.8664
GMI 1.00770.98831.00031.00610.97090.9810.98190.99190.99720.9976
AQI 0.98091.0860.96691.01440.93381.03130.99230.91730.93451.4134
SGI 1.02011.08881.12410.92581.06441.13011.10261.04821.07730.9828
DEPI 1.06431.08930.98280.9770.96821.00021.05760.970.97960.9458
SGAI 0.99681.01931.00621.03380.97470.99481.0070.99510.9831.0302
LVGI 0.98541.24030.90420.99220.94650.92581.00560.94170.94171.0572
TATA -0.123-0.0515-0.0432-0.0923-0.0845-0.052-0.0425-0.0321-0.0421-0.1037
M-score -3.05-2.66-2.49-3.08-3.01-2.47-2.58-2.56-2.53-2.97

The Estee Lauder Companies Inc Quarterly Data

Dec13Mar14Jun14Sep14Dec14Mar15Jun15Sep15Dec15Mar16
DSRI 0.94120.96691.09270.90460.88460.93610.86641.01920.99791.0342
GMI 0.99320.99820.99720.99980.99860.99790.99760.99760.99920.9979
AQI 0.910.93190.93450.96091.31071.40981.41341.5691.19661.2364
SGI 1.04121.06241.07731.05991.05371.0310.98281.00541.01041.0145
DEPI 0.93260.98490.97960.94450.9520.91530.94580.99261.00741.0373
SGAI 1.01510.99980.9830.98580.98680.98921.03021.005811.0102
LVGI 0.90890.96280.94170.9660.99890.9581.05721.13461.11181.0879
TATA -0.0443-0.0551-0.0421-0.0654-0.0779-0.0688-0.1037-0.0776-0.0852-0.0794
M-score -2.73-2.73-2.53-2.83-2.78-2.66-2.97-2.64-2.83-2.74
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