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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: -3.54   Max: -2.02
Current: -2.62

-3.54
-2.02

During the past 13 years, the highest Beneish M-Score of Allergan Inc was -2.02. The lowest was -3.54. And the median was -2.65.


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 * 0.9012+0.528 * 0.9888+0.404 * 0.8924+0.892 * 1.1488+0.115 * 1.0929
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9803+4.679 * -0.0359-0.327 * 0.9281
=-2.62

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

This Year (Dec14) TTM:Last Year (Dec13) TTM:
Accounts Receivable was $915 Mil.
Revenue was 1910.5 + 1817.1 + 1864.2 + 1646.1 = $7,238 Mil.
Gross Profit was 1701.4 + 1610.5 + 1642 + 1441.6 = $6,396 Mil.
Total Current Assets was $6,871 Mil.
Total Assets was $12,416 Mil.
Property, Plant and Equipment(Net PPE) was $1,006 Mil.
Depreciation, Depletion and Amortization(DDA) was $248 Mil.
Selling, General & Admin. Expense(SGA) was $2,837 Mil.
Total Current Liabilities was $1,557 Mil.
Long-Term Debt was $2,085 Mil.
Net Income was 537.2 + 312.5 + 417.2 + 257.3 = $1,524 Mil.
Non Operating Income was 21.3 + 43 + -16.2 + -6.4 = $42 Mil.
Cash Flow from Operations was 694.2 + 594.5 + 473.3 + 165.8 = $1,928 Mil.
Accounts Receivable was $883 Mil.
Revenue was 1684.4 + 1558.7 + 1597.7 + 1459.6 = $6,300 Mil.
Gross Profit was 1479.8 + 1366.5 + 1398.6 + 1259.7 = $5,505 Mil.
Total Current Assets was $5,320 Mil.
Total Assets was $10,574 Mil.
Property, Plant and Equipment(Net PPE) was $923 Mil.
Depreciation, Depletion and Amortization(DDA) was $255 Mil.
Selling, General & Admin. Expense(SGA) was $2,519 Mil.
Total Current Liabilities was $1,244 Mil.
Long-Term Debt was $2,098 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)
=(914.5 / 7237.9) / (883.3 / 6300.4)
=0.1263488 / 0.14019745
=0.9012

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)
=(1610.5 / 6300.4) / (1701.4 / 7237.9)
=0.87369056 / 0.88361265
=0.9888

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 - (6871.2 + 1006.3) / 12415.7) / (1 - (5319.7 + 923.2) / 10574.3)
=0.36552107 / 0.40961577
=0.8924

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
=7237.9 / 6300.4
=1.1488

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))
=(254.6 / (254.6 + 923.2)) / (248.1 / (248.1 + 1006.3))
=0.21616573 / 0.1977838
=1.0929

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)
=(2837.2 / 7237.9) / (2519.4 / 6300.4)
=0.39199215 / 0.39987937
=0.9803

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)
=((2085.3 + 1557.3) / 12415.7) / ((2098.3 + 1244.3) / 10574.3)
=0.2933866 / 0.31610603
=0.9281

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
=(1524.2 - 41.7 - 1927.8) / 12415.7
=-0.0359

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

Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14
DSRI 0.88831.20230.93091.041.04711.02771.02460.97071.07120.9012
GMI 0.9751.02890.97951.00240.99260.97660.990.99410.99230.9888
AQI 1.01912.81671.09190.96280.87140.881.01520.86091.10820.8924
SGI 1.13781.30761.28581.11791.02281.09231.10161.0421.11581.1488
DEPI 0.95920.72850.86480.95031.03831.00751.01721.0321.07131.0929
SGAI 1.041.08850.97990.98821.01221.25150.77640.93691.02960.9803
LVGI 0.8471.01610.89260.95260.91521.20640.78760.97851.11260.9281
TATA -0.0091-0.1507-0.0407-0.0203-0.064-0.0538-0.0173-0.0521-0.0662-0.0359
M-score -2.47-2.03-2.43-2.43-2.74-2.79-2.34-2.75-2.62-2.62

Allergan Inc Quarterly Data

Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14Dec14
DSRI 1.17230.97070.99030.98930.95341.07120.99021.00590.92490.9012
GMI 0.99280.99410.99390.99180.99160.99230.990.99140.99130.9888
AQI 0.87930.86091.11641.07681.0721.10820.86130.87690.91160.8924
SGI 1.04711.0421.04781.06821.09171.11581.12651.14351.15171.1488
DEPI 1.02171.0321.00111.02141.0351.07131.16531.1811.16991.0929
SGAI 0.9470.93690.95920.96210.97571.02961.02291.02881.0390.9803
LVGI 0.96750.97851.1981.15831.12811.11260.91030.96160.96460.9281
TATA -0.0444-0.0521-0.0662-0.0627-0.0657-0.0662-0.047-0.0374-0.0405-0.0359
M-score -2.52-2.75-2.77-2.74-2.76-2.62-2.61-2.55-2.62-2.62
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