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Allergan PLC (NYSE:AGN)
Beneish M-Score
-1.42 (As of Today)

The zones of discrimination for M-Score is as such:

An M-Score of less than -2.22 suggests that the company is not an accounting manipulator.
An M-Score of greater than -2.22 signals that the company is likely an accounting manipulator.

Allergan PLC has a M-score of -1.42 signals that the company is a manipulator.

AGN' s 10-Year Beneish M-Score Range
Min: -3.55   Max: -0.96
Current: -1.42

-3.55
-0.96

During the past 13 years, the highest Beneish M-Score of Allergan PLC was -0.96. The lowest was -3.55. And the median was -2.58.


Definition

The M-score was created by Professor Messod Beneish. Instead of measuring the bankruptcy risk (Z-Score) or business trend (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 Allergan PLC 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 * 1.7058+0.528 * 0.8897+0.404 * 1.2397+0.892 * 1.5515+0.115 * 0.8367
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.3113+4.679 * -0.031-0.327 * 0.7062
=-1.42

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.

This Year (Mar15) TTM:Last Year (Mar14) TTM:
Accounts Receivable was $3,993 Mil.
Revenue was 4234.2 + 4056.9 + 3683.1 + 2667.2 = $14,641 Mil.
Gross Profit was 2520.8 + 2225.6 + 1800.1 + 1370.7 = $7,917 Mil.
Total Current Assets was $11,017 Mil.
Total Assets was $139,461 Mil.
Property, Plant and Equipment(Net PPE) was $2,798 Mil.
Depreciation, Depletion and Amortization(DDA) was $3,331 Mil.
Selling, General & Admin. Expense(SGA) was $4,463 Mil.
Total Current Liabilities was $7,656 Mil.
Long-Term Debt was $42,701 Mil.
Net Income was -512 + -732.9 + -1042.8 + 48.7 = $-2,239 Mil.
Non Operating Income was -198 + -42.6 + 31.9 + -35.8 = $-245 Mil.
Cash Flow from Operations was 525 + 811.6 + 522.3 + 469.5 = $2,328 Mil.
Accounts Receivable was $1,509 Mil.
Revenue was 2655.1 + 2779.3 + 2013 + 1989.8 = $9,437 Mil.
Gross Profit was 1362.1 + 1308.7 + 929.8 + 939.5 = $4,540 Mil.
Total Current Assets was $4,541 Mil.
Total Assets was $22,404 Mil.
Property, Plant and Equipment(Net PPE) was $1,581 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,319 Mil.
Selling, General & Admin. Expense(SGA) was $2,194 Mil.
Total Current Liabilities was $3,002 Mil.
Long-Term Debt was $8,452 Mil.



1. DSRI = Days Sales in Receivables Index

Measured as the ratio of days’ sales in 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)
=(3992.8 / 14641.4) / (1508.7 / 9437.2)
=0.27270616 / 0.15986733
=1.7058

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)
=(2225.6 / 9437.2) / (2520.8 / 14641.4)
=0.48108549 / 0.54074064
=0.8897

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 plant, property and equipment to total assets.

AQI=(1 - (CurrentAssets_t + PPE_t) / TotalAssets_t) / (1 - (CurrentAssets_t-1 + PPE_t-1) / TotalAssets_t-1)
=(1 - (11017.2 + 2797.9) / 139460.7) / (1 - (4540.7 + 1581.3) / 22403.9)
=0.90093912 / 0.726744
=1.2397

4. SGI = Sales Growth Index

Ratio of sales 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
=14641.4 / 9437.2
=1.5515

5. DEPI = Depreciation Index

Measured as the ratio of the rate of depreciation 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))
=(1318.7 / (1318.7 + 1581.3)) / (3331.2 / (3331.2 + 2797.9))
=0.45472414 / 0.54350557
=0.8367

6. SGAI = Sales, General and Administrative expenses Index

The ratio of SGA expenses 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)
=(4462.8 / 14641.4) / (2193.7 / 9437.2)
=0.30480692 / 0.23245242
=1.3113

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$sgai= in leverage

LVGI=((LTD_t + CurrentLiabilities_t) / TotalAssets_t) / ((LTD_t-1 + CurrentLiabilities_t-1) / TotalAssets_t-1)
=((42700.5 + 7655.5) / 139460.7) / ((8452.2 + 3002.1) / 22403.9)
=0.36107663 / 0.51126366
=0.7062

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
=(-2239 - -244.5 - 2328.4) / 139460.7
=-0.031

An M-Score of less than -2.22 suggests that the company will not be a manipulator. An M-Score of greater than -2.22 signals that the company is likely to be a manipulator.

Allergan PLC has a M-score of -1.42 signals that the company is likely to be a manipulator.


Related Terms

Altman Z-Score, Piotroski F-Score, Accounts Receivable, Revenue, Gross Profit, Total Current Assets, Total Assets, Property, Plant and Equipment, Depreciation, Depletion and Amortization, Selling, General & Admin. Expense, Total Current Liabilities, Long-Term Debt, Net Income, Non Operating Income, Cash Flow from Operations


Historical Data

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.

Allergan PLC Annual Data

Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14
DSRI 1.3230.95840.55051.12431.540.84891.6170.88490.71951.1218
GMI 1.03631.27970.94840.97540.9510.9740.99821.03370.92750.888
AQI 0.94071.14490.9680.91531.37280.98320.891.22171.1781.143
SGI 1.00341.20231.26141.01561.10161.27711.28531.29021.46711.5053
DEPI 0.62111.34870.88561.30790.9620.70160.79111.37520.71430.6138
SGAI 0.86350.97211.09440.98991.11541.13810.77681.20311.19121.1657
LVGI 1.041.78070.80260.91761.0480.86151.2511.59010.81460.7276
TATA -0.0515-0.2263-0.0836-0.0537-0.0276-0.0729-0.0553-0.043-0.0873-0.073
M-score -2.46-3.40-3.06-2.59-1.94-2.75-2.03-2.61-2.70-2.24

Allergan PLC Quarterly Data

Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14Dec14Mar15
DSRI 0.88491.02991.24631.10270.71950.78790.78171.0591.12181.7058
GMI 1.03370.98380.96980.95450.92750.8960.8960.90110.8880.8897
AQI 1.22171.15661.13811.14871.1781.1591.02161.42411.1431.2397
SGI 1.29021.20141.2571.33971.46711.50131.46151.54081.50531.5515
DEPI 1.37521.36741.28961.24610.71430.66750.65270.61830.61380.8367
SGAI 1.20311.24221.3111.36451.19121.1221.02991.15121.16571.3113
LVGI 1.59011.62051.56751.58410.81460.78950.91660.58830.72760.7062
TATA -0.043-0.0636-0.106-0.1121-0.0873-0.0888-0.0672-0.0585-0.073-0.031
M-score -2.61-2.72-2.69-2.80-2.70-2.62-2.65-2.03-2.24-1.42
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