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Allergan Inc (NYSE:AGN)
Beneish M-Score
-2.55 (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 -2.55 suggests that the company is not a manipulator.

AGN' s 10-Year Beneish M-Score Range
Min: -3.94   Max: -1.79
Current: -2.55

-3.94
-1.79

During the past 13 years, the highest Beneish M-Score of Allergan Inc was -1.79. The lowest was -3.94. And the median was -2.66.


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 * 1.0059+0.528 * 0.9914+0.404 * 0.8769+0.892 * 1.1435+0.115 * 1.181
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0288+4.679 * -0.0374-0.327 * 0.9616
=-2.55

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

This Year (Jun14) TTM:Last Year (Jun13) TTM:
Accounts Receivable was $1,055 Mil.
Revenue was 1864.2 + 1646.1 + 1684.4 + 1558.7 = $6,753 Mil.
Gross Profit was 1642 + 1441.6 + 1479.8 + 1366.5 = $5,930 Mil.
Total Current Assets was $5,703 Mil.
Total Assets was $10,991 Mil.
Property, Plant and Equipment(Net PPE) was $978 Mil.
Depreciation, Depletion and Amortization(DDA) was $241 Mil.
Selling, General & Admin. Expense(SGA) was $2,682 Mil.
Total Current Liabilities was $1,406 Mil.
Long-Term Debt was $2,092 Mil.
Net Income was 417.2 + 257.3 + 312.9 + 299.8 = $1,287 Mil.
Non Operating Income was -16.2 + -6.4 + 2.7 + -15.5 = $-35 Mil.
Cash Flow from Operations was 473.3 + 165.8 + 515.3 + 579 = $1,733 Mil.
Accounts Receivable was $917 Mil.
Revenue was 1597.7 + 1459.6 + 1472.1 + 1376.5 = $5,906 Mil.
Gross Profit was 1398.6 + 1259.7 + 1289.1 + 1193.6 = $5,141 Mil.
Total Current Assets was $4,482 Mil.
Total Assets was $9,675 Mil.
Property, Plant and Equipment(Net PPE) was $866 Mil.
Depreciation, Depletion and Amortization(DDA) was $264 Mil.
Selling, General & Admin. Expense(SGA) was $2,280 Mil.
Total Current Liabilities was $1,098 Mil.
Long-Term Debt was $2,105 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)
=(1055 / 6753.4) / (917.2 / 5905.9)
=0.15621761 / 0.15530232
=1.0059

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)
=(1441.6 / 5905.9) / (1642 / 6753.4)
=0.87048545 / 0.87806142
=0.9914

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 - (5702.9 + 977.9) / 10990.8) / (1 - (4482.2 + 866.2) / 9675)
=0.39214616 / 0.4471938
=0.8769

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
=6753.4 / 5905.9
=1.1435

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))
=(264.1 / (264.1 + 866.2)) / (241.2 / (241.2 + 977.9))
=0.23365478 / 0.19785087
=1.181

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)
=(2682.2 / 6753.4) / (2279.9 / 5905.9)
=0.39716291 / 0.38603769
=1.0288

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)
=((2091.8 + 1406.4) / 10990.8) / ((2104.6 + 1097.9) / 9675)
=0.31828438 / 0.33100775
=0.9616

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
=(1287.2 - -35.4 - 1733.4) / 10990.8
=-0.0374

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 -2.55 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 0.95180.88831.20230.93091.041.04711.02771.02460.97071.0712
GMI 0.99450.9751.02890.97951.00240.99260.97660.990.99410.9923
AQI 0.79351.01912.81671.09190.96280.87140.881.01520.86091.1082
SGI 1.16231.13781.30761.28581.11791.02281.09231.10161.0421.1158
DEPI 0.93140.95920.72850.86480.95031.03831.00751.01721.0321.0713
SGAI 0.9771.041.08850.97990.98821.01221.25150.77640.93691.0296
LVGI 0.83690.8471.01610.89260.95260.91521.20640.78760.97851.1126
TATA -0.0857-0.0091-0.1507-0.0407-0.0203-0.064-0.0538-0.0173-0.0521-0.0662
M-score -2.82-2.47-2.03-2.43-2.43-2.74-2.79-2.34-2.75-2.62

Allergan Inc Quarterly Data

Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14
DSRI 1.16751.09811.17230.97070.99030.98930.95341.07120.99021.0059
GMI 0.99010.99380.99280.99410.99390.99180.99160.99230.990.9914
AQI 1.00270.93720.87930.86091.11641.07681.0721.10820.86130.8769
SGI 1.09131.0621.04711.0421.04781.06821.09171.11581.12651.1435
DEPI 1.02231.00361.02171.0321.00111.02141.0351.07131.16531.181
SGAI 0.74240.74330.9470.93690.95920.96210.97571.02961.02291.0288
LVGI 0.79660.9260.96750.97851.1981.15831.12811.11260.91030.9616
TATA -0.0162-0.0333-0.0444-0.0521-0.0662-0.0627-0.0657-0.0662-0.047-0.0374
M-score -2.21-2.45-2.52-2.75-2.77-2.74-2.76-2.62-2.61-2.55
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