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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.
Lowe's Companies Inc has a M-score of -2.64 suggests that the company is not a manipulator.
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.
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 * 0.9873||+||0.404 * 1.1537||+||0.892 * 1.0649||+||0.115 * 0.9828|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9957||+||4.679 * -0.051||-||0.327 * 1.0892|
|This Year (Apr14) TTM:||Last Year (Apr13) TTM:|
|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.
Net Income was 624 + 306 + 499 + 941 = $2,370 Mil.
Non Operating Income was 0 + 0 + 0 + 1 = $1 Mil.
Cash Flow from Operations was 1994 + 252 + 503 + 1364 = $4,113 Mil.
|Accounts Receivable was $0 Mil.
Revenue was 13088 + 11046 + 12073 + 14249 = $50,456 Mil.
Gross Profit was 4555 + 3785 + 4143 + 4834 = $17,317 Mil.
Total Current Assets was $12,014 Mil.
Total Assets was $34,731 Mil.
Property, Plant and Equipment(Net PPE) was $21,257 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,603 Mil.
Selling, General & Admin. Expense(SGA) was $12,225 Mil.
Total Current Liabilities was $10,439 Mil.
Long-Term Debt was $9,026 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 / 53731)||/||(0 / 50456)|
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)|
|=||(4042 / 50456)||/||(4758 / 53731)|
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 - (11952 + 20617) / 34229)||/||(1 - (12014 + 21257) / 34731)|
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))|
|=||(1603 / (1603 + 21257))||/||(1584 / (1584 + 20617))|
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)|
|=||(12962 / 53731)||/||(12225 / 50456)|
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)|
|=||((10080 + 10814) / 34229)||/||((9026 + 10439) / 34731)|
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|
|=||(2370 - 1||-||4113)||/||34229|
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 -2.64 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