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Estee Lauder Cos Inc (NYSE:EL)
Beneish M-Score
-2.73 (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 -2.73 suggests that the company is not a manipulator.

EL' s 10-Year Beneish M-Score Range
Min: -3.21   Max: -2.02
Current: -2.73

-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 * 0.9669+0.528 * 0.9982+0.404 * 0.9319+0.892 * 1.0624+0.115 * 0.9849
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9998+4.679 * -0.0551-0.327 * 0.9628
=-2.73

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

This Year (Mar14) TTM:Last Year (Mar13) TTM:
Accounts Receivable was $1,399 Mil.
Revenue was 2549.8 + 3018.7 + 2675 + 2407.4 = $10,651 Mil.
Gross Profit was 2051.1 + 2437.1 + 2130.9 + 1931.8 = $8,551 Mil.
Total Current Assets was $4,692 Mil.
Total Assets was $7,646 Mil.
Property, Plant and Equipment(Net PPE) was $1,435 Mil.
Depreciation, Depletion and Amortization(DDA) was $370 Mil.
Selling, General & Admin. Expense(SGA) was $6,939 Mil.
Total Current Liabilities was $2,039 Mil.
Long-Term Debt was $1,328 Mil.
Net Income was 213.2 + 432.5 + 300.7 + 94 = $1,040 Mil.
Non Operating Income was 0 + 0 + 0 + 0 = $0 Mil.
Cash Flow from Operations was 387 + 752.5 + 29.9 + 292.1 = $1,462 Mil.
Accounts Receivable was $1,362 Mil.
Revenue was 2291.8 + 2933 + 2549.5 + 2251.2 = $10,026 Mil.
Gross Profit was 1848.7 + 2365 + 2010.3 + 1810 = $8,034 Mil.
Total Current Assets was $4,286 Mil.
Total Assets was $7,095 Mil.
Property, Plant and Equipment(Net PPE) was $1,296 Mil.
Depreciation, Depletion and Amortization(DDA) was $328 Mil.
Selling, General & Admin. Expense(SGA) was $6,533 Mil.
Total Current Liabilities was $1,916 Mil.
Long-Term Debt was $1,329 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)
=(1399 / 10650.9) / (1361.9 / 10025.5)
=0.1313504 / 0.1358436
=0.9669

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)
=(2437.1 / 10025.5) / (2051.1 / 10650.9)
=0.80135654 / 0.80283356
=0.9982

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 - (4691.8 + 1434.9) / 7646) / (1 - (4286.2 + 1296) / 7095.1)
=0.19870521 / 0.21323167
=0.9319

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
=10650.9 / 10025.5
=1.0624

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))
=(327.6 / (327.6 + 1296)) / (369.7 / (369.7 + 1434.9))
=0.20177384 / 0.20486534
=0.9849

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)
=(6939.1 / 10650.9) / (6533.2 / 10025.5)
=0.65150363 / 0.65165827
=0.9998

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)
=((1327.7 + 2039.3) / 7646) / ((1329.2 + 1915.9) / 7095.1)
=0.44036097 / 0.45737199
=0.9628

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
=(1040.4 - 0 - 1461.5) / 7646
=-0.0551

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 -2.73 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

Jun04Jun05Jun06Jun07Jun08Jun09Jun10Jun11Jun12Jun13
DSRI 0.93051.06780.96481.02481.07390.88730.82151.12131.0171.0543
GMI 0.99351.00021.00770.98831.00031.00610.97090.9810.98190.9919
AQI 0.86780.98430.98091.0860.96691.01440.93381.03130.99230.9173
SGI 1.12671.09381.02931.08881.12410.92581.06441.13011.10261.0482
DEPI 0.97731.03521.06431.08930.98280.9770.96821.00021.05760.97
SGAI 0.99321.00060.99991.01931.00341.03660.97470.99481.0070.9951
LVGI 1.20491.04270.98541.24030.90420.99220.94650.92581.00560.9417
TATA -0.0842-0.015-0.0987-0.0512-0.0432-0.0923-0.0897-0.052-0.0425-0.0321
M-score -2.95-2.42-2.94-2.66-2.49-3.08-3.03-2.47-2.58-2.56

Estee Lauder Cos Inc Quarterly Data

Dec11Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14
DSRI 1.03550.94181.0171.09371.04690.99141.05430.9270.94120.9669
GMI 0.97870.97940.98190.98590.98880.98850.99190.99080.99320.9982
AQI 0.96791.01980.99230.92230.93990.92620.91730.93060.910.9319
SGI 1.13961.10871.10261.06431.05731.05281.04821.05321.04121.0624
DEPI 0.98061.01771.05761.07621.07040.99590.970.94960.93260.9849
SGAI 0.99281.01491.0071.011.00921.00360.99511.011.01510.9998
LVGI 0.9860.95921.00560.95060.9680.96650.94170.93440.90890.9628
TATA -0.0471-0.0504-0.0425-0.0246-0.0371-0.0334-0.0321-0.0508-0.0443-0.0551
M-score -2.56-2.66-2.58-2.47-2.57-2.62-2.56-2.76-2.73-2.73
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