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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: -3.94   Max: -1.79
Current: -2.62

-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 * 0.9249+0.528 * 0.9913+0.404 * 0.9116+0.892 * 1.1517+0.115 * 1.1699
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.039+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 + 1472.1 = $6,088 Mil.
Gross Profit was 1366.5 + 1398.6 + 1259.7 + 1289.1 = $5,314 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 $2,346 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 / 6088.1)
=0.13796743 / 0.14917626
=0.9249

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 / 6088.1) / (1610.5 / 7011.8)
=0.87283389 / 0.88050144
=0.9913

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 / 6088.1
=1.1517

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) / (2346.3 / 6088.1)
=0.40041074 / 0.38539117
=1.039

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 0.95180.88831.20230.93091.041.04711.02771.02460.97071.0712
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

Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14
DSRI 1.09811.17230.97070.99030.98930.95341.07120.99021.00590.9249
GMI 0.99380.99280.99410.99390.99180.99160.99230.990.99140.9913
AQI 0.93720.87930.86091.11641.07681.0721.10820.86130.87690.9116
SGI 1.0621.04711.0421.04781.06821.09171.11581.12651.14351.1517
DEPI 1.00361.02171.0321.00111.02141.0351.07131.16531.1811.1699
SGAI 0.74330.9470.93690.95920.96210.97571.02961.02291.02881.039
LVGI 0.9260.96750.97851.1981.15831.12811.11260.91030.96160.9646
TATA -0.0333-0.0444-0.0521-0.0662-0.0627-0.0657-0.0662-0.047-0.0374-0.0405
M-score -2.45-2.52-2.75-2.77-2.74-2.76-2.62-2.61-2.55-2.62
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