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Estee Lauder Cos Inc (NYSE:EL)
Beneish M-Score
-2.83 (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.

Estee Lauder Cos Inc has a M-score of -2.83 suggests that the company is not a manipulator.

EL' s 10-Year Beneish M-Score Range
Min: -3.21   Max: -2.02
Current: -2.83

-3.21
-2.02

During the past 13 years, the highest Beneish M-Score of Estee Lauder Cos Inc was -2.02. The lowest was -3.21. And the median was -2.59.


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 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 * 0.9046+0.528 * 0.9998+0.404 * 0.9609+0.892 * 1.0599+0.115 * 0.9445
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9858+4.679 * -0.0654-0.327 * 0.966
=-2.83

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

This Year (Sep14) TTM:Last Year (Sep13) TTM:
Accounts Receivable was $1,502 Mil.
Revenue was 2631 + 2725.3 + 2549.8 + 3018.7 = $10,925 Mil.
Gross Profit was 2094.4 + 2191.5 + 2051.1 + 2437.1 = $8,774 Mil.
Total Current Assets was $4,728 Mil.
Total Assets was $7,664 Mil.
Property, Plant and Equipment(Net PPE) was $1,444 Mil.
Depreciation, Depletion and Amortization(DDA) was $396 Mil.
Selling, General & Admin. Expense(SGA) was $7,052 Mil.
Total Current Liabilities was $1,942 Mil.
Long-Term Debt was $1,319 Mil.
Net Income was 228.1 + 257.7 + 213.2 + 432.5 = $1,132 Mil.
Non Operating Income was 0 + 0 + 0 + 0 = $0 Mil.
Cash Flow from Operations was 127.7 + 365.8 + 387 + 752.5 = $1,633 Mil.
Accounts Receivable was $1,567 Mil.
Revenue was 2675 + 2407.4 + 2291.8 + 2933 = $10,307 Mil.
Gross Profit was 2130.9 + 1931.8 + 1848.7 + 2365 = $8,276 Mil.
Total Current Assets was $4,632 Mil.
Total Assets was $7,521 Mil.
Property, Plant and Equipment(Net PPE) was $1,364 Mil.
Depreciation, Depletion and Amortization(DDA) was $348 Mil.
Selling, General & Admin. Expense(SGA) was $6,749 Mil.
Total Current Liabilities was $1,988 Mil.
Long-Term Debt was $1,325 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)
=(1502.1 / 10924.8) / (1566.7 / 10307.2)
=0.13749451 / 0.15200054
=0.9046

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)
=(2191.5 / 10307.2) / (2094.4 / 10924.8)
=0.80297268 / 0.80313598
=0.9998

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 - (4727.9 + 1444.3) / 7664.3) / (1 - (4632.4 + 1364.4) / 7520.5)
=0.19468184 / 0.20260621
=0.9609

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
=10924.8 / 10307.2
=1.0599

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))
=(348.3 / (348.3 + 1364.4)) / (396.3 / (396.3 + 1444.3))
=0.20336311 / 0.21531022
=0.9445

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)
=(7052.1 / 10924.8) / (6749.3 / 10307.2)
=0.64551296 / 0.65481411
=0.9858

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)
=((1319 + 1941.7) / 7664.3) / ((1324.7 + 1987.6) / 7520.5)
=0.42544003 / 0.44043614
=0.966

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
=(1131.5 - 0 - 1633) / 7664.3
=-0.0654

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 -2.83 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.

Estee Lauder Cos Inc Annual Data

Jun05Jun06Jun07Jun08Jun09Jun10Jun11Jun12Jun13Jun14
DSRI 1.06780.96481.02481.07390.88730.82151.12131.0171.05431.0927
GMI 1.00021.00770.98831.00031.00610.97090.9810.98190.99190.9972
AQI 0.98430.98091.0860.96691.01440.93381.03130.99230.91730.9345
SGI 1.09381.02931.08881.12410.92581.06441.13011.10261.04821.0773
DEPI 1.03521.06431.08930.98280.9770.96821.00021.05760.970.9796
SGAI 1.00060.99991.01931.00341.03660.97470.99481.0070.99510.983
LVGI 1.04270.98541.24030.90420.99220.94650.92581.00560.94170.9417
TATA -0.015-0.0987-0.0512-0.0432-0.0923-0.0897-0.052-0.0425-0.0321-0.0421
M-score -2.42-2.94-2.66-2.49-3.08-3.03-2.47-2.58-2.56-2.53

Estee Lauder Cos Inc Quarterly Data

Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14
DSRI 1.0171.09371.04690.99141.05430.9270.94120.96691.09270.9046
GMI 0.98190.98590.98880.98850.99190.99080.99320.99820.99720.9998
AQI 0.99230.92230.93990.92620.91730.93060.910.93190.93450.9609
SGI 1.10261.06431.05731.05281.04821.05321.04121.06241.07731.0599
DEPI 1.05761.07621.07040.99590.970.94960.93260.98490.97960.9445
SGAI 1.0071.011.00921.00360.99511.011.01510.99980.9830.9858
LVGI 1.00560.95060.9680.96650.94170.93440.90890.96280.94170.966
TATA -0.0425-0.0246-0.0371-0.0334-0.0321-0.0508-0.0443-0.0551-0.0421-0.0654
M-score -2.58-2.47-2.57-2.62-2.56-2.76-2.73-2.73-2.53-2.83
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