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Lowe's Companies Inc (NYSE:LOW)
Beneish M-Score
-2.77 (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 -2.77 suggests that the company is not a manipulator.

LOW' s Beneish M-Score Range Over the Past 10 Years
Min: -3.61   Max: -1.71
Current: -2.77

-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 -2.72.


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 * 0.999+0.404 * 0.9425+0.892 * 1.0548+0.115 * 0.9845
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9726+4.679 * -0.0608-0.327 * 1.1091
=-2.77

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

This Year (Oct15) TTM:Last Year (Oct14) TTM:
Accounts Receivable was $0 Mil.
Revenue was 14360 + 17348 + 14129 + 12541 = $58,378 Mil.
Gross Profit was 4990 + 5981 + 5012 + 4347 = $20,330 Mil.
Total Current Assets was $12,395 Mil.
Total Assets was $33,655 Mil.
Property, Plant and Equipment(Net PPE) was $19,655 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,579 Mil.
Selling, General & Admin. Expense(SGA) was $13,502 Mil.
Total Current Liabilities was $12,162 Mil.
Long-Term Debt was $11,541 Mil.
Net Income was 736 + 1126 + 673 + 450 = $2,985 Mil.
Non Operating Income was -139 + 0 + 0 + 379 = $240 Mil.
Cash Flow from Operations was 382 + 1686 + 2478 + 245 = $4,791 Mil.
Accounts Receivable was $0 Mil.
Revenue was 13681 + 16599 + 13403 + 11660 = $55,343 Mil.
Gross Profit was 4718 + 5735 + 4758 + 4042 = $19,253 Mil.
Total Current Assets was $12,130 Mil.
Total Assets was $34,032 Mil.
Property, Plant and Equipment(Net PPE) was $20,180 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,594 Mil.
Selling, General & Admin. Expense(SGA) was $13,160 Mil.
Total Current Liabilities was $10,804 Mil.
Long-Term Debt was $10,806 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 / 58378) / (0 / 55343)
=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)
=(5981 / 55343) / (4990 / 58378)
=0.34788501 / 0.34824763
=0.999

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 - (12395 + 19655) / 33655) / (1 - (12130 + 20180) / 34032)
=0.04768979 / 0.05059944
=0.9425

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
=58378 / 55343
=1.0548

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))
=(1594 / (1594 + 20180)) / (1579 / (1579 + 19655))
=0.07320658 / 0.07436187
=0.9845

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)
=(13502 / 58378) / (13160 / 55343)
=0.23128576 / 0.23778978
=0.9726

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)
=((11541 + 12162) / 33655) / ((10806 + 10804) / 34032)
=0.70429357 / 0.6349906
=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
=(2985 - 240 - 4791) / 33655
=-0.0608

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 -2.77 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 0.98140.99090.99641.01260.98130.99231.01681.00760.99160.9943
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 1.03360.98650.95440.93840.95571.00961.05640.95431.00740.9507
SGAI 1.00460.99481.04781.04041.08250.98951.01980.96630.99380.9808
LVGI 0.91491.03311.10340.89450.93231.12551.09761.15211.13061.0936
TATA -0.0373-0.0448-0.0435-0.0591-0.0688-0.0545-0.0746-0.0552-0.0558-0.0701
M-score -1.71-3.61-2.49-2.80-2.80-2.31-2.85-2.80-2.68-2.76

Lowe's Companies Inc Quarterly Data

Jul13Oct13Jan14Apr14Jul14Oct14Jan15Apr15Jul15Oct15
DSRI 1111111111
GMI 0.99370.99360.99150.98730.98920.99180.99430.99921.00150.999
AQI 0.94181.1311.13791.15371.11920.99151.09971.04170.97250.9425
SGI 1.02031.03321.05731.06491.0521.04811.05261.05991.05641.0548
DEPI 0.95650.96661.00740.98280.97790.9710.95070.97020.97990.9845
SGAI 0.96540.9820.99380.99570.9980.99430.98080.97370.97420.9726
LVGI 1.06751.10241.13061.08921.10271.11011.09361.10911.13351.1091
TATA -0.0645-0.0541-0.0558-0.0509-0.0667-0.0662-0.078-0.0847-0.079-0.0608
M-score -2.81-2.69-2.68-2.64-2.74-2.79-2.79-2.84-2.85-2.77
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