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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.
During the past 13 years, the highest Beneish M-Score of Lowe's Companies Inc was -1.74. The lowest was -3.63. And the median was -2.73.
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 * 1.0062||+||0.404 * 1.5444||+||0.892 * 1.0701||+||0.115 * 1.0144|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0476||+||4.679 * -0.0867||-||0.327 * 1.085|
* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.
|This Year (Oct16) TTM:||Last Year (Oct15) TTM:|
|Accounts Receivable was $0 Mil.|
Revenue was 15739 + 18260 + 15234 + 13236 = $62,469 Mil.
Gross Profit was 5407 + 6288 + 5337 + 4588 = $21,620 Mil.
Total Current Assets was $12,728 Mil.
Total Assets was $35,370 Mil.
Property, Plant and Equipment(Net PPE) was $20,037 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,585 Mil.
Selling, General & Admin. Expense(SGA) was $15,136 Mil.
Total Current Liabilities was $12,633 Mil.
Long-Term Debt was $14,395 Mil.
Net Income was 379 + 1167 + 884 + 11 = $2,441 Mil.
Non Operating Income was 0 + 0 + 0 + 0 = $0 Mil.
Cash Flow from Operations was 641 + 1408 + 3220 + 238 = $5,507 Mil.
|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.
1. DSRI = Days Sales in Receivables Index
A large increase in DSR could be indicative of revenue inflation.
|DSRI||=||(Receivables_t / Revenue_t)||/||(Receivables_t-1 / Revenue_t-1)|
|=||(0 / 62469)||/||(0 / 58378)|
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.
|=||(GrossProfit_t-1 / Revenue_t-1)||/||(GrossProfit_t / Revenue_t)|
|=||(20330 / 58378)||/||(21620 / 62469)|
3. AQI = Asset Quality Index
AQI is the ratio of asset quality in year t to year t-1.
|AQI||=||(1 - (CurrentAssets_t + PPE_t) / TotalAssets_t)||/||(1 - (CurrentAssets_t-1 + PPE_t-1) / TotalAssets_t-1)|
|=||(1 - (12728 + 20037) / 35370)||/||(1 - (12395 + 19655) / 33655)|
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.
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))|
|=||(1579 / (1579 + 19655))||/||(1585 / (1585 + 20037))|
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)|
|=||(15136 / 62469)||/||(13502 / 58378)|
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)|
|=||((14395 + 12633) / 35370)||/||((11541 + 12162) / 33655)|
8. TATA = Total Accruals to Total Assets
Total accruals calculated as the change in working capital accounts other than cash less depreciation.
|=||(NetIncome_t - NonOperatingIncome_t||-||CashFlowsfromOperations_t)||/||TotalAssets_t|
|=||(2441 - 0||-||5507)||/||35370|
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 -2.63 suggests that the company will not be a manipulator.
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
Lowe's Companies Inc Annual Data
Lowe's Companies Inc Quarterly Data