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Lowe's Companies Inc (NYSE:LOW)
Beneish M-Score
-2.68 (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 -2.68 suggests that the company is not a manipulator.

LOW' s 10-Year Beneish M-Score Range
Min: -3.61   Max: -1.71
Current: -2.68

-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 -2.70.


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 * 0.9915+0.404 * 1.1379+0.892 * 1.0573+0.115 * 1.0074
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9938+4.679 * -0.0557-0.327 * 1.1306
=-2.68

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

This Year (Jan14) TTM:Last Year (Jan13) TTM:
Accounts Receivable was $0 Mil.
Revenue was 11660 + 12957 + 15711 + 13088 = $53,416 Mil.
Gross Profit was 4042 + 4481 + 5397 + 4555 = $18,475 Mil.
Total Current Assets was $10,296 Mil.
Total Assets was $32,732 Mil.
Property, Plant and Equipment(Net PPE) was $20,834 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,562 Mil.
Selling, General & Admin. Expense(SGA) was $12,865 Mil.
Total Current Liabilities was $8,876 Mil.
Long-Term Debt was $10,086 Mil.
Net Income was 306 + 499 + 941 + 540 = $2,286 Mil.
Non Operating Income was 0 + 0 + 1 + -3 = $-2 Mil.
Cash Flow from Operations was 252 + 503 + 1364 + 1992 = $4,111 Mil.
Accounts Receivable was $0 Mil.
Revenue was 11046 + 12073 + 14249 + 13153 = $50,521 Mil.
Gross Profit was 3785 + 4143 + 4834 + 4564 = $17,326 Mil.
Total Current Assets was $9,784 Mil.
Total Assets was $32,666 Mil.
Property, Plant and Equipment(Net PPE) was $21,477 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,623 Mil.
Selling, General & Admin. Expense(SGA) was $12,244 Mil.
Total Current Liabilities was $7,708 Mil.
Long-Term Debt was $9,030 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 / 53416) / (0 / 50521)
=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)
=(4481 / 50521) / (4042 / 53416)
=0.3429465 / 0.34587015
=0.9915

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 - (10296 + 20834) / 32732) / (1 - (9784 + 21477) / 32666)
=0.04894293 / 0.04301108
=1.1379

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
=53416 / 50521
=1.0573

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))
=(1623 / (1623 + 21477)) / (1562 / (1562 + 20834))
=0.07025974 / 0.0697446
=1.0074

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)
=(12865 / 53416) / (12244 / 50521)
=0.24084544 / 0.24235466
=0.9938

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)
=((10086 + 8876) / 32732) / ((9030 + 7708) / 32666)
=0.57931077 / 0.51239821
=1.1306

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
=(2286 - -2 - 4111) / 32732
=-0.0557

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 -2.68 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

Jan05Jan06Jan07Jan08Jan09Jan10Jan11Jan12Jan13Jan14
DSRI 0.05211.686501111111
GMI 0.92810.98140.99090.99641.01260.98130.99231.01681.00760.9916
AQI 0.69871.32040.86061.5340.82071.07312.0790.92720.95151.1379
SGI 1.18241.18591.08521.02890.99890.97911.03381.02851.00621.0573
DEPI 1.01581.03360.98650.95440.93840.95571.00961.05640.95431.0074
SGAI 1.1391.00460.99481.04781.04041.08250.98951.01980.96630.9938
LVGI 0.98520.91491.03311.10340.89450.93231.12551.09761.15211.1306
TATA -0.0344-0.0373-0.0448-0.0435-0.0591-0.0688-0.0545-0.0746-0.0552-0.0558
M-score -3.53-1.71-3.61-2.49-2.80-2.80-2.31-2.85-2.80-2.68

Lowe's Companies Inc Quarterly Data

Oct11Jan12Apr12Jul12Oct12Jan13Apr13Jul13Oct13Jan14
DSRI 1111111111
GMI 1.00441.01671.02381.02531.01661.00771.00180.99370.99360.9915
AQI 1.080.92720.91650.98160.98270.95150.88920.94181.1311.1379
SGI 1.01151.02851.05271.04281.04171.00620.98591.02031.03321.0573
DEPI 1.05671.05641.0361.00370.98160.95430.96170.95650.96661.0074
SGAI 1.02071.021.00391.00510.96540.96610.97510.96540.9820.9938
LVGI 1.13631.09761.17271.14841.15761.15211.04191.06751.10241.1306
TATA -0.0618-0.0748-0.0668-0.0579-0.0581-0.0551-0.0378-0.0645-0.0541-0.0557
M-score -2.77-2.85-2.82-2.76-2.76-2.80-2.73-2.81-2.69-2.68
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