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Lowe's Companies Inc (NYSE:LOW)
Beneish M-Score
-2.81 (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.

Lowe's Companies Inc has a M-score of -2.81 suggests that the company is not a manipulator.

LOW' s 10-Year Beneish M-Score Range
Min: -3.61   Max: -1.71
Current: -2.81

-3.61
-1.71

During the past 13 years, the highest Beneish M-Score of Lowe's Companies Inc was -1.71. The lowest was -3.61. And the median was -2.71.


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 Lowe's 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+0.528 * 0.9992+0.404 * 1.0417+0.892 * 1.0599+0.115 * 0.9702
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9737+4.679 * -0.0775-0.327 * 1.1091
=-2.81

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

This Year (Apr15) TTM:Last Year (Apr14) TTM:
Accounts Receivable was $0 Mil.
Revenue was 14129 + 12541 + 13681 + 16599 = $56,950 Mil.
Gross Profit was 5012 + 4347 + 4718 + 5735 = $19,812 Mil.
Total Current Assets was $12,791 Mil.
Total Assets was $34,422 Mil.
Property, Plant and Equipment(Net PPE) was $19,892 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,579 Mil.
Selling, General & Admin. Expense(SGA) was $13,377 Mil.
Total Current Liabilities was $12,970 Mil.
Long-Term Debt was $10,334 Mil.
Net Income was 673 + 450 + 585 + 1039 = $2,747 Mil.
Non Operating Income was 0 + 0 + 0 + 0 = $0 Mil.
Cash Flow from Operations was 2478 + 245 + 761 + 1929 = $5,413 Mil.
Accounts Receivable was $0 Mil.
Revenue was 13403 + 11660 + 12957 + 15711 = $53,731 Mil.
Gross Profit was 4758 + 4042 + 4481 + 5397 = $18,678 Mil.
Total Current Assets was $11,952 Mil.
Total Assets was $34,229 Mil.
Property, Plant and Equipment(Net PPE) was $20,617 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,584 Mil.
Selling, General & Admin. Expense(SGA) was $12,962 Mil.
Total Current Liabilities was $10,814 Mil.
Long-Term Debt was $10,080 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)
=(0 / 56950) / (0 / 53731)
=0 / 0
=1

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)
=(4347 / 53731) / (5012 / 56950)
=0.34762055 / 0.34788411
=0.9992

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 - (12791 + 19892) / 34422) / (1 - (11952 + 20617) / 34229)
=0.05052002 / 0.04849689
=1.0417

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
=56950 / 53731
=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))
=(1584 / (1584 + 20617)) / (1579 / (1579 + 19892))
=0.07134814 / 0.07354106
=0.9702

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)
=(13377 / 56950) / (12962 / 53731)
=0.23489025 / 0.24123876
=0.9737

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)
=((10334 + 12970) / 34422) / ((10080 + 10814) / 34229)
=0.67700889 / 0.61041807
=1.1091

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
=(2747 - 0 - 5413) / 34422
=-0.0775

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.

Lowe's Companies Inc has a M-score of -2.81 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.

Lowe's Companies Inc Annual Data

Jan06Jan07Jan08Jan09Jan10Jan11Jan12Jan13Jan14Jan15
DSRI 1.6865011111111
GMI 0.98550.99150.99641.01260.98130.99231.01681.00760.99160.9943
AQI 1.32040.86061.5340.82071.07312.0790.92720.95151.13791.0997
SGI 1.18591.08521.02890.99890.97911.03381.02851.00621.05731.0525
DEPI 1.02730.98650.95440.93840.95571.00961.05640.95431.00740.9507
SGAI 1.00460.99481.04781.051.06820.99361.01980.96630.99380.9808
LVGI 0.91491.03311.10340.89450.93231.12551.09761.15211.13061.0936
TATA -0.0371-0.0448-0.0435-0.0505-0.0688-0.0545-0.0746-0.055-0.0558-0.0701
M-score -1.70-3.61-2.49-2.76-2.80-2.31-2.85-2.80-2.68-2.76

Lowe's Companies Inc Quarterly Data

Jan13Apr13Jul13Oct13Jan14Apr14Jul14Oct14Jan15Apr15
DSRI 1111111111
GMI 1.00771.00180.99370.99360.99150.98730.98920.99180.99430.9992
AQI 0.95150.88920.94181.1311.13791.15371.11920.99151.09971.0417
SGI 1.00620.98591.02031.03321.05731.06491.0521.04811.05261.0599
DEPI 0.95430.96170.95650.96661.00740.98280.97790.9710.95070.9702
SGAI 0.96610.97510.96540.9820.99380.99570.9980.99430.98080.9737
LVGI 1.15211.04191.06751.10241.13061.08921.10271.11011.09361.1091
TATA -0.0551-0.0379-0.0645-0.0541-0.0558-0.0509-0.0667-0.07-0.0701-0.0775
M-score -2.80-2.73-2.81-2.69-2.68-2.64-2.74-2.81-2.76-2.81
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