Table 8 L score Model Description.
From: Creating quality portfolios using score-based models: a systematic review
Component | Derivation |
|---|---|
L-score | L1 + L2 + L3 + L4 + L5 + L6 + L7 + L8 |
L1 | 1 if there is a positive change in the inventory compared to the previous year else 0 |
L2 | 1 if there is a positive change in the accounts receivable compared to the previous year else 0 |
L3 | 1 if there is a positive change in the gross margins compared to the previous year else 0 |
L4 | 1 if there is a positive change in selling and administrative expenses compared to the previous year else 0 |
L5 | 1 if there is a positive change in the effective tax rate compared to the previous year else 0 |
L6 | 1 if there is a positive change in the Capital expenditure compared to the previous year else 0 |
L7 | 1 if there is a positive change in the margin to cost ratio compared to the previous year else 0 |
L8 | 1 if there is a positive change in the working capital compared to the previous year else 0 |
