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L'Oreal (L'Oreal) Beneish M-Score

: -2.59 (As of Today)
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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 -2.59 no higher than -1.78, which implies that the company is unlikely to be a manipulator.

The historical rank and industry rank for L'Oreal's Beneish M-Score or its related term are showing as below:

LRLCY' s Beneish M-Score Range Over the Past 10 Years
Min: -2.94   Med: -2.66   Max: -2.32
Current: -2.59

During the past 13 years, the highest Beneish M-Score of L'Oreal was -2.32. The lowest was -2.94. And the median was -2.66.


L'Oreal Beneish M-Score Historical Data

The historical data trend for L'Oreal's Beneish M-Score can be seen below:

* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD.
* For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.

* Premium members only.

L'Oreal Annual Data
Trend Dec14 Dec15 Dec16 Dec17 Dec18 Dec19 Dec20 Dec21 Dec22 Dec23
Beneish M-Score
Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only -2.78 -2.94 -2.69 -2.32 -2.59

L'Oreal Semi-Annual Data
Jun14 Dec14 Jun15 Dec15 Jun16 Dec16 Jun17 Dec17 Jun18 Dec18 Jun19 Dec19 Jun20 Dec20 Jun21 Dec21 Jun22 Dec22 Jun23 Dec23
Beneish M-Score Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only -2.69 - -2.32 - -2.59

Competitive Comparison

For the Household & Personal Products subindustry, L'Oreal's Beneish M-Score, along with its competitors' market caps and Beneish M-Score data, can be viewed below:

* Competitive companies are chosen from companies within the same industry, with headquarter located in same country, with closest market capitalization; x-axis shows the market cap, and y-axis shows the term value; the bigger the dot, the larger the market cap. Note that "N/A" values will not show up in the chart.


L'Oreal Beneish M-Score Distribution

For the Consumer Packaged Goods industry and Consumer Defensive sector, L'Oreal's Beneish M-Score distribution charts can be found below:

* The bar in red indicates where L'Oreal's Beneish M-Score falls into.



L'Oreal Beneish M-Score Calculation

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 L'Oreal 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 * 0.9949+0.528 * 0.9797+0.404 * 0.9728+0.892 * 1.1081+0.115 * 1.0024
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0213+4.679 * -0.027396-0.327 * 1.0589
=-2.56

* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD.
* For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.

This Year (Dec23) TTM:Last Year (Dec22) TTM:
Total Receivables was $5,554 Mil.
Revenue was $44,910 Mil.
Gross Profit was $33,168 Mil.
Total Current Assets was $17,803 Mil.
Total Assets was $56,549 Mil.
Property, Plant and Equipment(Net PPE) was $6,063 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,870 Mil.
Selling, General, & Admin. Expense(SGA) was $22,883 Mil.
Total Current Liabilities was $16,248 Mil.
Long-Term Debt & Capital Lease Obligation was $6,697 Mil.
Net Income was $6,744 Mil.
Gross Profit was $0 Mil.
Cash Flow from Operations was $8,293 Mil.
Total Receivables was $5,038 Mil.
Revenue was $40,530 Mil.
Gross Profit was $29,325 Mil.
Total Current Assets was $14,883 Mil.
Total Assets was $49,623 Mil.
Property, Plant and Equipment(Net PPE) was $5,259 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,627 Mil.
Selling, General, & Admin. Expense(SGA) was $20,220 Mil.
Total Current Liabilities was $14,533 Mil.
Long-Term Debt & Capital Lease Obligation was $4,482 Mil.




1. DSRI = Days Sales in Receivables Index

Measured as the ratio of Revenue in Total 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)
=(5553.653 / 44910.033) / (5037.606 / 40530.297)
=0.123662 / 0.124292
=0.9949

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)
=(29325.424 / 40530.297) / (33168.484 / 44910.033)
=0.723543 / 0.738554
=0.9797

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 - (17803.053 + 6063.25) / 56548.637) / (1 - (14883.051 + 5259.004) / 49623.093)
=0.577951 / 0.594099
=0.9728

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
=44910.033 / 40530.297
=1.1081

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))
=(1627.225 / (1627.225 + 5259.004)) / (1870.229 / (1870.229 + 6063.25))
=0.236301 / 0.235739
=1.0024

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)
=(22882.552 / 44910.033) / (20220.127 / 40530.297)
=0.50952 / 0.498889
=1.0213

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)
=((6696.619 + 16248.31) / 56548.637) / ((4482.097 + 14533.475) / 49623.093)
=0.405756 / 0.3832
=1.0589

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
=(6743.73 - 0 - 8292.912) / 56548.637
=-0.027396

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.

L'Oreal has a M-score of -2.56 suggests that the company is unlikely to be a manipulator.


L'Oreal Beneish M-Score Related Terms

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L'Oreal (L'Oreal) Business Description

Address
41, Rue Martre, Clichy Cedex, Paris, FRA, 92117
Founded in 1909, L'Oreal has grown into the largest beauty company in the world, participating in categories including skincare (40% of 2022 sales), makeup (20%), haircare (27%), fragrance (9%), and sanitary products (4%). The firm also has a diversified geographic footprint, generating 32% of sales in its home market of Western Europe, 25% from North America, 19% in North Asia, and the rest from various emerging markets across South Asia, Latin America, and Africa. L'Oreal owns a mix of premium and mass beauty brands sold through a wide range of channels such as mass retail, drugstores, department stores, travel retail, e-commerce, hair salons, and medi-spas. Leading brands include Lancome, Yves Saint Laurent, Maybelline, Kiehl's, L'Oreal Paris, Kerastase, CeraVe, Garnier, and Armani.

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