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ELI Lilly earnings quality score
How much of the reported profit is backed by cash, and how many markers of managed earnings the filings show
Score40 / 100 · grade D · rank 959 of 1027
ELI Lilly (LLY) scores 40 of 100 for earnings quality, grade D: rank 959 of 1027 companies and 121 of 126 in health. It loses the most points on accruals of +4.0% of assets, higher than 95% of companies, Beneish M-score -1.84: in the grey zone, Montier C-score 5 of 6 checks failed. It earns full or near-full marks for adjusted earnings 4% below GAAP, Piotroski F-score 8 of 9, profit about as variable as cash flow (smoothness 1.08). Revenue grew 46% in the year: fast growth raises accruals, the Beneish and Dechow scores and the C-score by construction, so a growing company scores lower than a steady one with the same accounting.
What earned and lost points
| Component | What the filings show | Points | Of |
|---|---|---|---|
| Accruals | accruals of +4.0% of assets, higher than 95% of companies | 1 | 20 |
| Beneish M-score | Beneish M-score -1.84: in the grey zone | 2 | 15 |
| Dechow F-score | Dechow F-score 1.59 (above normal) | 9 | 15 |
| Montier C-score | Montier C-score 5 of 6 checks failed | 2 | 15 |
| Discretionary accruals | discretionary accruals of +6.0% of assets (modified Jones), larger than most | 3 | 10 |
| Piotroski F-score | Piotroski F-score 8 of 9 | 9 | 10 |
| Non-GAAP gap | adjusted earnings 4% below GAAP | 9 | 10 |
| Earnings smoothness | profit about as variable as cash flow (smoothness 1.08) | 5 | 5 |
How the score is built
Eight published measures, each scored against the whole universe or on its own scale and weighted: accruals 20, discretionary accruals 10, Beneish M 15, Dechow F 15, Montier C 15, Piotroski F 10, the non-GAAP gap 10, smoothness 5. A measure that cannot be computed (Beneish for a bank, say) drops out and the rest is rescaled, so every company is scored on what applies to it.
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Computed from the companies’ own XBRL filings (latest fiscal year) by published formulas; a statistical screen, not an audit or an accusation. A low score means the reported profit shows more of the markers of managed or low-quality earnings than its peers. Not investment advice.