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Allergan PLC (NYSE:AGN)
Beneish M-Score
-1.94 (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 PLC has a M-score of -1.94 signals that the company is a manipulator.

AGN' s Beneish M-Score Range Over the Past 10 Years
Min: -3.56   Max: -0.95
Current: -1.94

-3.56
-0.95

During the past 13 years, the highest Beneish M-Score of Allergan PLC was -0.95. The lowest was -3.56. And the median was -2.53.


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 PLC 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 * 0.7907+0.528 * 0.9289+0.404 * 0.8806+0.892 * 1.4154+0.115 * 0.9559
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.8453+4.679 * 0.0772-0.327 * 0.7992
=-1.94

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

This Year (Sep16) TTM:Last Year (Sep15) TTM:
Accounts Receivable was $2,399 Mil.
Revenue was 3622.2 + 3684.8 + 3795.9 + 5989.8 = $17,093 Mil.
Gross Profit was 3160 + 3243.3 + 2984.1 + 3329.4 = $12,717 Mil.
Total Current Assets was $31,724 Mil.
Total Assets was $143,608 Mil.
Property, Plant and Equipment(Net PPE) was $1,566 Mil.
Depreciation, Depletion and Amortization(DDA) was $6,573 Mil.
Selling, General & Admin. Expense(SGA) was $4,980 Mil.
Total Current Liabilities was $8,026 Mil.
Long-Term Debt was $31,178 Mil.
Net Income was 15220 + -501.7 + 255.7 + -630.9 = $14,343 Mil.
Non Operating Income was 33.6 + 150.1 + 0.5 + 4.3 = $189 Mil.
Cash Flow from Operations was -1092.4 + 1382.5 + 1218.5 + 1555.5 = $3,064 Mil.
Accounts Receivable was $2,143 Mil.
Revenue was 3469.5 + 3628.7 + 2562.6 + 2415.6 = $12,076 Mil.
Gross Profit was 2759.2 + 2710.9 + 1542.5 + 1333.4 = $8,346 Mil.
Total Current Assets was $16,659 Mil.
Total Assets was $142,816 Mil.
Property, Plant and Equipment(Net PPE) was $1,570 Mil.
Depreciation, Depletion and Amortization(DDA) was $5,315 Mil.
Selling, General & Admin. Expense(SGA) was $4,162 Mil.
Total Current Liabilities was $8,133 Mil.
Long-Term Debt was $40,648 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)
=(2398.5 / 17092.7) / (2143.2 / 12076.4)
=0.14032306 / 0.17747011
=0.7907

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)
=(8346 / 12076.4) / (12716.8 / 17092.7)
=0.6911 / 0.74399012
=0.9289

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 - (31723.9 + 1566.3) / 143607.7) / (1 - (16658.7 + 1569.9) / 142816.3)
=0.76818652 / 0.87236331
=0.8806

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
=17092.7 / 12076.4
=1.4154

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))
=(5314.7 / (5314.7 + 1569.9)) / (6572.9 / (6572.9 + 1566.3))
=0.77196932 / 0.80756094
=0.9559

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)
=(4980 / 17092.7) / (4162.2 / 12076.4)
=0.29135245 / 0.34465569
=0.8453

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)
=((31178.2 + 8025.5) / 143607.7) / ((40648.1 + 8133) / 142816.3)
=0.27299163 / 0.34156535
=0.7992

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
=(14343.1 - 188.5 - 3064.1) / 143607.7
=0.0772

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 PLC has a M-score of -1.94 signals that the company is likely to 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 local exchange's currency.

Allergan PLC Annual Data

Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15
DSRI 0.95840.55051.12431.540.84891.6170.88492.39910.30580.8544
GMI 1.27970.94840.97540.9510.9740.9991.03291.15790.75490.7161
AQI 1.14490.9680.91531.37280.98320.891.22171.1781.17191.0763
SGI 1.20231.26141.01561.10161.27711.28531.29020.442.58942.2364
DEPI 1.34870.88561.30790.9620.70160.79111.37520.71430.43191.1411
SGAI 0.97211.09440.98991.11541.13810.77681.20311.61161.13780.8548
LVGI 1.78070.80260.91761.0480.86151.2511.59010.81460.73240.9382
TATA -0.245-0.0836-0.0537-0.0276-0.0729-0.0553-0.043-0.0856-0.0729-0.0028
M-score -3.49-3.06-2.59-1.94-2.75-2.03-2.61-2.02-2.10-1.58

Allergan PLC Quarterly Data

Jun14Sep14Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16
DSRI 1.95722.98770.20840.90831.05870.33251.20730.38550.35780.7907
GMI 0.91590.94240.7230.84430.78910.68590.77040.76270.8380.9289
AQI 1.02161.42411.17191.23971.45791.02491.07631.01461.02070.8806
SGI 0.58370.54623.79972.91372.66312.8911.58271.72351.57471.4154
DEPI 0.65270.61830.43190.83670.82540.74861.14110.67450.76340.9559
SGAI 1.21071.65310.94771.24491.43040.90870.99850.77890.750.8453
LVGI 0.91660.58830.73240.70620.61130.9330.93820.99210.97920.7992
TATA -0.0657-0.0577-0.0726-0.031-0.040.0022-0.0028-0.0037-0.00710.0772
M-score -2.36-1.21-1.10-0.95-1.02-1.54-1.84-2.53-2.65-1.94
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