Market Cap : 38.22 B | Enterprise Value : 38.51 B | PE Ratio : 68.81 | PB Ratio : 17.76 |
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The zones of discrimination for M-Score is as such:
An M-Score of equal or less than -1.78 suggests that the company is unlikely to be a manipulator.
An M-Score of greater than -1.78 signals that the company is likely to be a manipulator.
Warning Sign:
Beneish M-Score -0.43 higher than -1.78, which implies that the company might have manipulated its financial results.
During the past 13 years, the highest Beneish M-Score of Lululemon Athletica was -0.35. The lowest was -3.50. And the median was -2.50.
* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.
* The bar in red indicates where Lululemon Athletica's Beneish M-Score falls into.
The M-score was created by Professor Messod Beneish. Instead of measuring the bankruptcy risk (Altman Z-Score) or business trend (Piotroski 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 Lululemon Athletica 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 * 1.5405 | + | 0.528 * 0.9987 | + | 0.404 * 4.9342 | + | 0.892 * 1.0855 | + | 0.115 * 0.9177 | |
- | 0.172 * SGAI | + | 4.679 * TATA | - | 0.327 * LVGI | |||||||
- | 0.172 * 1.0536 | + | 4.679 * -0.0234 | - | 0.327 * 0.9443 | |||||||
= | -0.43 |
* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.
This Year (Oct20) TTM: | Last Year (Oct19) TTM: |
Accounts Receivable was $60 Mil. Revenue was 1117.426 + 902.942 + 651.962 + 1397.491 = $4,070 Mil. Gross Profit was 627.354 + 489.501 + 334.402 + 810.826 = $2,262 Mil. Total Current Assets was $1,601 Mil. Total Assets was $3,628 Mil. Property, Plant and Equipment(Net PPE) was $1,434 Mil. Depreciation, Depletion and Amortization(DDA) was $181 Mil. Selling, General, & Admin. Expense(SGA) was $1,461 Mil. Total Current Liabilities was $731 Mil. Long-Term Debt & Capital Lease Obligation was $635 Mil. Net Income was 143.643 + 86.801 + 28.632 + 298.021 = $557 Mil. Non Operating Income was -9.111 + -11.808 + 1.174 + 2.129 = $-18 Mil. Cash Flow from Operations was 25.342 + 181.305 + -121.243 + 574.21 = $660 Mil. |
Accounts Receivable was $36 Mil. Revenue was 916.138 + 883.352 + 782.315 + 1167.458 = $3,749 Mil. Gross Profit was 505.044 + 485.796 + 421.72 + 668.583 = $2,081 Mil. Total Current Assets was $1,452 Mil. Total Assets was $2,855 Mil. Property, Plant and Equipment(Net PPE) was $1,309 Mil. Depreciation, Depletion and Amortization(DDA) was $150 Mil. Selling, General, & Admin. Expense(SGA) was $1,277 Mil. Total Current Liabilities was $575 Mil. Long-Term Debt & Capital Lease Obligation was $564 Mil. |
1. DSRI = Days Sales in Receivables Index
Measured as the ratio of Revenue in Accounts Receivable 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) |
= | (59.772 / 4069.821) | / | (35.744 / 3749.263) | |
= | 0.01468664 | / | 0.00953361 | |
= | 1.5405 |
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) | |
= | (2081.143 / 3749.263) | / | (2262.083 / 4069.821) | |
= | 0.55508056 | / | 0.55581879 | |
= | 0.9987 |
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 Property, Plant and Equipment to Total Assets.
AQI | = | (1 - (CurrentAssets_t + PPE_t) / TotalAssets_t) | / | (1 - (CurrentAssets_t-1 + PPE_t-1) / TotalAssets_t-1) |
= | (1 - (1600.813 + 1433.966) / 3627.92) | / | (1 - (1451.676 + 1308.864) / 2855.144) | |
= | 0.16349341 | / | 0.03313458 | |
= | 4.9342 |
4. SGI = Sales Growth Index
Ratio of Revenue 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 | |
= | 4069.821 | / | 3749.263 | |
= | 1.0855 |
5. DEPI = Depreciation Index
Measured as the ratio of the rate of Depreciation, Depletion and Amortization 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)) |
= | (149.813 / (149.813 + 1308.864)) | / | (180.698 / (180.698 + 1433.966)) | |
= | 0.10270471 | / | 0.11191059 | |
= | 0.9177 |
Note: If the Depreciation, Depletion and Amortization data is not available, we assume that the depreciation rate is constant and set the Depreciation Index to 1.
6. SGAI = Sales, General and Administrative expenses Index
The ratio of Selling, General, & Admin. Expense(SGA) to Sales 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) |
= | (1460.563 / 4069.821) | / | (1277.093 / 3749.263) | |
= | 0.35887647 | / | 0.34062508 | |
= | 1.0536 |
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 in leverage
LVGI | = | ((LTD_t + CurrentLiabilities_t) / TotalAssets_t) | / | ((LTD_t-1 + CurrentLiabilities_t-1) / TotalAssets_t-1) |
= | ((635.386 + 730.878) / 3627.92) | / | ((563.925 + 574.769) / 2855.144) | |
= | 0.37659706 | / | 0.39882192 | |
= | 0.9443 |
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 | |
= | (557.097 - -17.616 | - | 659.614) | / | 3627.92 | |
= | -0.0234 |
An M-Score of equal or less than -1.78 suggests that the company is unlikely to be a manipulator. An M-Score of greater than -1.78 signals that the company is likely to be a manipulator.
Lululemon Athletica has a M-score of -0.43 signals that the company is likely to be a manipulator.
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