Market Cap : 2.04 B | Enterprise Value : 2.06 B | P/E (TTM) : 26.94 | P/B : 2.74 |
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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.
Good Sign:
Beneish M-Score -3.37 no higher than -1.78, which implies that the company is unlikely to be a manipulator.
During the past 13 years, the highest Beneish M-Score of La-Z-Boy was -1.71. The lowest was -4.84. And the median was -2.63.
* 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 La-Z-Boy'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 La-Z-Boy 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 * 0.9288 | + | 0.528 * 0.9446 | + | 0.404 * 0.7971 | + | 0.892 * 0.8909 | + | 0.115 * 1.0105 | |
- | 0.172 * SGAI | + | 4.679 * TATA | - | 0.327 * LVGI | |||||||
- | 0.172 * 1.0188 | + | 4.679 * -0.1204 | - | 0.327 * 1.1616 | |||||||
= | -3.37 |
* 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 $128 Mil. Revenue was 459.12 + 285.458 + 367.281 + 475.856 = $1,588 Mil. Gross Profit was 200.555 + 116.363 + 171.706 + 199.638 = $688 Mil. Total Current Assets was $796 Mil. Total Assets was $1,650 Mil. Property, Plant and Equipment(Net PPE) was $553 Mil. Depreciation, Depletion and Amortization(DDA) was $33 Mil. Selling, General, & Admin. Expense(SGA) was $543 Mil. Total Current Liabilities was $490 Mil. Long-Term Debt & Capital Lease Obligation was $295 Mil. Net Income was 34.935 + 4.798 + 2.295 + 34.512 = $77 Mil. Non Operating Income was -0.011 + 1.474 + -26.555 + -5.998 = $-31 Mil. Cash Flow from Operations was 89.41 + 106.3 + 44.483 + 66.057 = $306 Mil. |
Accounts Receivable was $155 Mil. Revenue was 447.212 + 413.633 + 453.791 + 467.582 = $1,782 Mil. Gross Profit was 182.389 + 167.712 + 189.773 + 189.87 = $730 Mil. Total Current Assets was $562 Mil. Total Assets was $1,392 Mil. Property, Plant and Equipment(Net PPE) was $513 Mil. Depreciation, Depletion and Amortization(DDA) was $31 Mil. Selling, General, & Admin. Expense(SGA) was $599 Mil. Total Current Liabilities was $318 Mil. Long-Term Debt & Capital Lease Obligation was $252 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) |
= | (128.324 / 1587.715) | / | (155.086 / 1782.218) | |
= | 0.08082307 | / | 0.08701854 | |
= | 0.9288 |
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) | |
= | (729.744 / 1782.218) | / | (688.262 / 1587.715) | |
= | 0.40945833 | / | 0.43349216 | |
= | 0.9446 |
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 - (796.402 + 553.453) / 1650.343) | / | (1 - (561.589 + 512.7) / 1392.328) | |
= | 0.18207609 | / | 0.22842247 | |
= | 0.7971 |
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 | |
= | 1587.715 | / | 1782.218 | |
= | 0.8909 |
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)) |
= | (30.542 / (30.542 + 512.7)) | / | (32.607 / (32.607 + 553.453)) | |
= | 0.05622172 | / | 0.05563765 | |
= | 1.0105 |
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) |
= | (543.397 / 1587.715) | / | (598.707 / 1782.218) | |
= | 0.34225097 | / | 0.33593365 | |
= | 1.0188 |
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) |
= | ((294.601 + 490.312) / 1650.343) | / | ((252.456 + 317.606) / 1392.328) | |
= | 0.47560598 | / | 0.40943082 | |
= | 1.1616 |
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 | |
= | (76.54 - -31.09 | - | 306.25) | / | 1650.343 | |
= | -0.1204 |
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.
La-Z-Boy has a M-score of -3.37 suggests that the company is unlikely to be a manipulator.
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