Switch to:
Allergan Inc (NYSE:AGN)
Beneish M-Score
-2.62 (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 Inc has a M-score of -2.62 suggests that the company is not a manipulator.

AGN' s 10-Year Beneish M-Score Range
Min: -3.52   Max: -1.8
Current: -2.62

-3.52
-1.8

During the past 13 years, the highest Beneish M-Score of Allergan Inc was -1.80. The lowest was -3.52. And the median was -2.68.


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 Inc 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 * 0.9305+0.528 * 0.991+0.404 * 0.9116+0.892 * 1.1448+0.115 * 1.1699
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0383+4.679 * -0.0405-0.327 * 0.9646
=-2.62

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

This Year (Sep14) TTM:Last Year (Sep13) TTM:
Accounts Receivable was $967 Mil.
Revenue was 1817.1 + 1864.2 + 1646.1 + 1684.4 = $7,012 Mil.
Gross Profit was 1610.5 + 1642 + 1441.6 + 1479.8 = $6,174 Mil.
Total Current Assets was $6,104 Mil.
Total Assets was $11,646 Mil.
Property, Plant and Equipment(Net PPE) was $1,005 Mil.
Depreciation, Depletion and Amortization(DDA) was $245 Mil.
Selling, General & Admin. Expense(SGA) was $2,808 Mil.
Total Current Liabilities was $1,567 Mil.
Long-Term Debt was $2,089 Mil.
Net Income was 312.5 + 417.2 + 257.3 + 312.9 = $1,300 Mil.
Non Operating Income was 43 + -16.2 + -6.4 + 2.7 = $23 Mil.
Cash Flow from Operations was 594.5 + 473.3 + 165.8 + 515.3 = $1,749 Mil.
Accounts Receivable was $908 Mil.
Revenue was 1558.7 + 1597.7 + 1459.6 + 1508.9 = $6,125 Mil.
Gross Profit was 1366.5 + 1398.6 + 1259.7 + 1319.7 = $5,345 Mil.
Total Current Assets was $4,932 Mil.
Total Assets was $10,145 Mil.
Property, Plant and Equipment(Net PPE) was $877 Mil.
Depreciation, Depletion and Amortization(DDA) was $260 Mil.
Selling, General & Admin. Expense(SGA) was $2,362 Mil.
Total Current Liabilities was $1,200 Mil.
Long-Term Debt was $2,102 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)
=(967.4 / 7011.8) / (908.2 / 6124.9)
=0.13796743 / 0.14827997
=0.9305

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)
=(1642 / 6124.9) / (1610.5 / 7011.8)
=0.87258567 / 0.88050144
=0.991

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 - (6103.8 + 1005.3) / 11645.8) / (1 - (4932.4 + 877) / 10144.6)
=0.38955675 / 0.42734065
=0.9116

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
=7011.8 / 6124.9
=1.1448

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))
=(260.3 / (260.3 + 877)) / (244.5 / (244.5 + 1005.3))
=0.22887541 / 0.1956313
=1.1699

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)
=(2807.6 / 7011.8) / (2361.9 / 6124.9)
=0.40041074 / 0.38562262
=1.0383

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)
=((2088.6 + 1567) / 11645.8) / ((2101.5 + 1199.7) / 10144.6)
=0.31389857 / 0.32541451
=0.9646

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
=(1299.9 - 23.1 - 1748.9) / 11645.8
=-0.0405

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 Inc has a M-score of -2.62 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 Inc Annual Data

Dec04Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13
DSRI 0.9580.89141.19020.93091.041.04711.02771.02460.97631.0652
GMI 10.97981.01930.97951.00240.99260.97660.990.99470.9917
AQI 0.79351.01912.81671.09190.96310.87120.881.01520.98130.9722
SGI 1.15481.13381.32081.28581.11791.02281.09231.10161.07141.0851
DEPI 0.93140.95920.72850.86480.94931.03931.00751.01721.03331.0699
SGAI 0.97251.03491.10460.97990.98821.01231.25150.77640.94241.0235
LVGI 0.83690.8471.01610.89260.97990.88981.20640.78760.97841.1128
TATA -0.0798-0.0155-0.16-0.0407-0.0179-0.064-0.0538-0.0173-0.0521-0.0662
M-score -2.79-2.50-2.08-2.43-2.43-2.73-2.79-2.34-2.67-2.70

Allergan Inc Quarterly Data

Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14
DSRI 1.08141.1470.97630.97860.99210.96851.06521.011.01850.9305
GMI 0.99390.99320.99470.99460.99220.99150.99170.98930.99090.991
AQI 0.93720.87930.98131.11641.07681.0720.97220.86130.87690.9116
SGI 1.07841.07011.07141.06031.06521.07461.08511.10441.12931.1448
DEPI 1.00361.02171.03331.00111.02141.0351.06991.16531.1811.1699
SGAI 0.74580.74670.94240.96240.96090.97151.02351.01831.02671.0383
LVGI 0.9260.96750.97841.1981.15831.12811.11280.91030.96160.9646
TATA -0.0333-0.0444-0.0521-0.0662-0.0627-0.0657-0.0662-0.047-0.0374-0.0405
M-score -2.45-2.49-2.67-2.77-2.74-2.76-2.70-2.61-2.55-2.62
Get WordPress Plugins for easy affiliate links on Stock Tickers and Guru Names | Earn affiliate commissions by embedding GuruFocus Charts
GuruFocus Affiliate Program: Earn up to $400 per referral. ( Learn More)
Free 7-day Trial
FEEDBACK