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Allergan PLC (NYSE:AGN)
Beneish M-Score
-2.75 (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 -2.75 suggests that the company is not a manipulator.

AGN' s Beneish M-Score Range Over the Past 10 Years
Min: -3.56   Max: -0.95
Current: -2.75

-3.56
-0.95

During the past 13 years, the highest Beneish M-Score of Allergan PLC was -0.95. The lowest was -3.56. And the median was -2.54.


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 * 0.3844+0.528 * 0.79+0.404 * 1.0207+0.892 * 1.4657+0.115 * 0.7634
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.7896+4.679 * -0.0071-0.327 * 0.9792
=-2.75

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

This Year (Jun16) TTM:Last Year (Jun15) TTM:
Accounts Receivable was $2,491 Mil.
Revenue was 3684.8 + 3795.9 + 4197.5 + 4088.9 = $15,767 Mil.
Gross Profit was 3243.3 + 2984.1 + 3087 + 2846 = $12,160 Mil.
Total Current Assets was $8,755 Mil.
Total Assets was $132,619 Mil.
Property, Plant and Equipment(Net PPE) was $1,557 Mil.
Depreciation, Depletion and Amortization(DDA) was $6,568 Mil.
Selling, General & Admin. Expense(SGA) was $4,748 Mil.
Total Current Liabilities was $8,867 Mil.
Long-Term Debt was $37,075 Mil.
Net Income was -501.7 + 255.7 + -630.9 + 5301.2 = $4,424 Mil.
Non Operating Income was 150.1 + 0.5 + 4.3 + 0.2 = $155 Mil.
Cash Flow from Operations was 1382.5 + 1218.5 + 1555.5 + 1048.2 = $5,205 Mil.
Accounts Receivable was $4,420 Mil.
Revenue was 3628.7 + 2562.6 + 2415.6 + 2150.8 = $10,758 Mil.
Gross Profit was 2710.9 + 1542.5 + 1333.4 + 967.7 = $6,555 Mil.
Total Current Assets was $10,487 Mil.
Total Assets was $138,411 Mil.
Property, Plant and Equipment(Net PPE) was $2,859 Mil.
Depreciation, Depletion and Amortization(DDA) was $4,608 Mil.
Selling, General & Admin. Expense(SGA) was $4,103 Mil.
Total Current Liabilities was $7,650 Mil.
Long-Term Debt was $41,319 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)
=(2490.5 / 15767.1) / (4420.1 / 10757.7)
=0.15795549 / 0.41087779
=0.3844

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)
=(6554.5 / 10757.7) / (12160.4 / 15767.1)
=0.60928451 / 0.77125153
=0.79

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 - (8755.2 + 1557.2) / 132619.1) / (1 - (10486.9 + 2859) / 138411.1)
=0.92224046 / 0.90357782
=1.0207

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
=15767.1 / 10757.7
=1.4657

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))
=(4607.6 / (4607.6 + 2859)) / (6568.4 / (6568.4 + 1557.2))
=0.6170948 / 0.80835877
=0.7634

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)
=(4748.1 / 15767.1) / (4102.6 / 10757.7)
=0.30113971 / 0.38136405
=0.7896

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)
=((37075.1 + 8867.4) / 132619.1) / ((41319.4 + 7649.5) / 138411.1)
=0.34642446 / 0.35379316
=0.9792

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
=(4424.3 - 155.1 - 5204.7) / 132619.1
=-0.0071

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 -2.75 suggests that the company will not 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

Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15
DSRI 0.95840.55051.12431.540.84891.6170.88492.39910.30580.9654
GMI 1.27970.94840.97540.9510.9740.9991.03291.15790.75490.7161
AQI 1.14490.9680.91531.37280.98320.891.22171.1781.17191.0758
SGI 1.20231.26141.01561.10161.27711.28531.29020.442.58942.2364
DEPI 1.34870.88561.30790.9620.70160.79111.37520.71430.43191.1475
SGAI 0.97211.09440.98991.11541.13810.77681.20311.61161.13780.8548
LVGI 1.78070.80260.91761.0480.86151.2511.59010.81460.73240.9402
TATA -0.245-0.0836-0.0537-0.0276-0.0729-0.0553-0.043-0.0856-0.0729-0.0028
M-score -3.49-3.06-2.59-1.94-2.75-2.03-2.61-2.02-2.10-1.48

Allergan PLC Quarterly Data

Mar14Jun14Sep14Dec14Mar15Jun15Sep15Dec15Mar16Jun16
DSRI 2.21151.95722.98770.20840.90831.05870.31631.47470.41430.3844
GMI 0.95910.91590.94240.7230.84430.78910.71360.72350.71920.79
AQI 1.1591.02161.42411.17191.23971.45791.02491.07581.01461.0207
SGI 0.53480.58370.54623.79972.91372.66313.03921.46411.60381.4657
DEPI 0.66750.65270.61830.43190.83670.82540.74861.14750.67450.7634
SGAI 1.40241.21071.65310.94771.24491.43040.87481.05720.81990.7896
LVGI 0.78950.91660.58830.73240.70620.61130.9330.94020.99210.9792
TATA -0.0871-0.0657-0.0577-0.0726-0.031-0.040.0022-0.0028-0.0037-0.0071
M-score -2.18-2.36-1.21-1.10-0.95-1.02-1.41-1.73-2.64-2.75
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