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Allergan Inc (NYSE:AGN)
Beneish M-Score
-2.61 (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 -2.61 suggests that the company is not a manipulator.

AGN' s 10-Year Beneish M-Score Range
Min: -3.94   Max: -1.79
Current: -2.61

-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 -2.67.


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 * 0.9902+0.528 * 0.99+0.404 * 0.8613+0.892 * 1.1265+0.115 * 1.1653
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0229+4.679 * -0.047-0.327 * 0.9103
=-2.61

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

This Year (Mar14) TTM:Last Year (Mar13) TTM:
Accounts Receivable was $990 Mil.
Revenue was 1646.1 + 1684.4 + 1558.7 + 1597.7 = $6,487 Mil.
Gross Profit was 1441.6 + 1479.8 + 1366.5 + 1398.6 = $5,687 Mil.
Total Current Assets was $5,459 Mil.
Total Assets was $10,720 Mil.
Property, Plant and Equipment(Net PPE) was $942 Mil.
Depreciation, Depletion and Amortization(DDA) was $242 Mil.
Selling, General & Admin. Expense(SGA) was $2,573 Mil.
Total Current Liabilities was $1,248 Mil.
Long-Term Debt was $2,095 Mil.
Net Income was 257.3 + 312.9 + 299.8 + 359.9 = $1,230 Mil.
Non Operating Income was -6.4 + 2.7 + -15.5 + 11.2 = $-8 Mil.
Cash Flow from Operations was 165.8 + 515.3 + 579 + 481.5 = $1,742 Mil.
Accounts Receivable was $888 Mil.
Revenue was 1459.6 + 1472.1 + 1376.5 + 1450.1 = $5,758 Mil.
Gross Profit was 1259.7 + 1289.1 + 1193.6 + 1254.8 = $4,997 Mil.
Total Current Assets was $4,070 Mil.
Total Assets was $9,251 Mil.
Property, Plant and Equipment(Net PPE) was $854 Mil.
Depreciation, Depletion and Amortization(DDA) was $267 Mil.
Selling, General & Admin. Expense(SGA) was $2,233 Mil.
Total Current Liabilities was $1,062 Mil.
Long-Term Debt was $2,108 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)
=(990.4 / 6486.9) / (887.9 / 5758.3)
=0.15267693 / 0.15419481
=0.9902

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)
=(1479.8 / 5758.3) / (1441.6 / 6486.9)
=0.86782557 / 0.87661287
=0.99

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 - (5458.7 + 942.3) / 10720.2) / (1 - (4069.5 + 853.9) / 9250.5)
=0.40290293 / 0.46776931
=0.8613

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
=6486.9 / 5758.3
=1.1265

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))
=(267 / (267 + 853.9)) / (242.1 / (242.1 + 942.3))
=0.23820145 / 0.20440729
=1.1653

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)
=(2573.2 / 6486.9) / (2233.1 / 5758.3)
=0.39667638 / 0.38780543
=1.0229

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)
=((2095.1 + 1248.1) / 10720.2) / ((2107.7 + 1061.5) / 9250.5)
=0.31185985 / 0.3425977
=0.9103

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
=(1229.9 - -8 - 1741.6) / 10720.2
=-0.047

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 -2.61 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

Dec11Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14
DSRI 1.02461.16751.09811.17230.97070.99030.98930.95341.07120.9902
GMI 0.990.99010.99380.99280.99410.99390.99180.99160.99230.99
AQI 1.01521.00270.93720.87930.86091.11641.07681.0721.10820.8613
SGI 1.10161.09131.0621.04711.0421.04781.06821.09171.11581.1265
DEPI 1.01721.02231.00361.02171.0321.00111.02141.0351.07131.1653
SGAI 0.77640.74240.74330.9470.93690.95920.96210.97571.02961.0229
LVGI 0.78760.79660.9260.96750.97851.1981.15831.12811.11260.9103
TATA -0.0173-0.0162-0.0333-0.0444-0.0521-0.0662-0.0627-0.0657-0.0662-0.047
M-score -2.34-2.21-2.45-2.52-2.75-2.77-2.74-2.76-2.62-2.61
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