Switch to:
GuruFocus has detected 2 Warning Signs with Avon Products Inc $AVP.
More than 500,000 people have already joined GuruFocus to track the stocks they follow and exchange investment ideas.
Avon Products Inc (NYSE:AVP)
Beneish M-Score
-2.45 (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.

Avon Products Inc has a M-score of -2.45 suggests that the company is not a manipulator.

AVP' s Beneish M-Score Range Over the Past 10 Years
Min: -4.28   Max: -1.99
Current: -2.45

-4.28
-1.99

During the past 13 years, the highest Beneish M-Score of Avon Products Inc was -1.99. The lowest was -4.28. And the median was -2.52.


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 Avon Products 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 * 1.1161+0.528 * 0.9964+0.404 * 1.0621+0.892 * 0.9281+0.115 * 1.0231
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9545+4.679 * -0.0192-0.327 * 0.8757
=-2.45

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

This Year (Dec16) TTM:Last Year (Dec15) TTM:
Accounts Receivable was $459 Mil.
Revenue was 1568.1 + 1408.8 + 1434.3 + 1306.5 = $5,718 Mil.
Gross Profit was 945.8 + 857.9 + 869.3 + 787.7 = $3,461 Mil.
Total Current Assets was $1,992 Mil.
Total Assets was $3,419 Mil.
Property, Plant and Equipment(Net PPE) was $711 Mil.
Depreciation, Depletion and Amortization(DDA) was $114 Mil.
Selling, General & Admin. Expense(SGA) was $3,139 Mil.
Total Current Liabilities was $1,486 Mil.
Long-Term Debt was $1,876 Mil.
Net Income was -10.7 + 36 + 33 + -165.9 = $-108 Mil.
Non Operating Income was -30.9 + -6.5 + 4.7 + -137.2 = $-170 Mil.
Cash Flow from Operations was 232.3 + 25.9 + 61.1 + -191.3 = $128 Mil.
Accounts Receivable was $443 Mil.
Revenue was 1607.3 + 1436.2 + 1564.9 + 1552.1 = $6,161 Mil.
Gross Profit was 943.6 + 877.2 + 953.9 + 940.4 = $3,715 Mil.
Total Current Assets was $2,341 Mil.
Total Assets was $3,870 Mil.
Property, Plant and Equipment(Net PPE) was $767 Mil.
Depreciation, Depletion and Amortization(DDA) was $126 Mil.
Selling, General & Admin. Expense(SGA) was $3,543 Mil.
Total Current Liabilities was $2,195 Mil.
Long-Term Debt was $2,151 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)
=(458.9 / 5717.7) / (443 / 6160.5)
=0.08025954 / 0.07190975
=1.1161

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)
=(3715.1 / 6160.5) / (3460.7 / 5717.7)
=0.6030517 / 0.60526086
=0.9964

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 - (1992.3 + 711.3) / 3418.9) / (1 - (2341.1 + 766.9) / 3870.4)
=0.20921934 / 0.19698222
=1.0621

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
=5717.7 / 6160.5
=0.9281

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))
=(126.1 / (126.1 + 766.9)) / (113.9 / (113.9 + 711.3))
=0.14120941 / 0.13802714
=1.0231

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)
=(3138.8 / 5717.7) / (3543.2 / 6160.5)
=0.548962 / 0.57514812
=0.9545

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)
=((1875.8 + 1485.7) / 3418.9) / ((2150.5 + 2195.1) / 3870.4)
=0.98321097 / 1.12277801
=0.8757

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
=(-107.6 - -169.9 - 128) / 3418.9
=-0.0192

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.

Avon Products Inc has a M-score of -2.45 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 local exchange's currency.

Avon Products Inc Annual Data

Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15Dec16
DSRI 0.9910.80431.16621.01380.90191.0381.11770.8471.06671.1161
GMI 1.00120.9571.00870.99550.99091.03640.97591.03251.00630.9964
AQI 1.05211.19670.87121.55631.01930.97820.9781.04640.73721.0621
SGI 1.14541.07560.95461.06441.02180.95150.80450.90010.80550.9281
DEPI 1.06760.97061.14680.99730.86671.00911.02960.84540.99461.0231
SGAI 0.97950.97991.04221.00491.01171.04151.00090.98561.04560.9545
LVGI 1.09840.96390.93121.0030.99131.05371.00881.11211.37330.8757
TATA -0.00920.0271-0.0218-0.0052-0.0138-0.0801-0.055-0.0961-0.3116-0.0192
M-score -2.40-2.40-2.48-2.21-2.63-2.88-2.82-3.18-4.28-2.45

Avon Products Inc Quarterly Data

Sep14Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16Dec16
DSRI 1.13390.8470.94431.02131.08131.06670.99650.98391.06191.1161
GMI 1.01391.03250.98410.99340.99481.00631.03021.02231.01850.9964
AQI 1.06831.04640.92190.78130.4180.73720.7370.88181.57281.0621
SGI 0.75380.90010.85310.80880.73720.80550.8430.90481.01160.9281
DEPI 1.30860.84540.88910.91590.95150.99460.9550.87880.85811.0231
SGAI 1.03220.98560.98030.940.98511.04561.01861.03510.98780.9545
LVGI 1.0451.11211.1391.14661.36791.37331.19451.16050.94020.8757
TATA -0.0867-0.0961-0.1026-0.0915-0.3075-0.3116-0.301-0.2981-0.0876-0.0192
M-score -2.93-3.18-3.24-3.20-4.44-4.28-4.19-4.08-2.58-2.45
Get WordPress Plugins for easy affiliate links on Stock Tickers and Guru Names | Earn affiliate commissions by embedding GuruFocus Charts
GuruFocus Affiliate Program: Earn up to $400 per referral. ( Learn More)
FEEDBACK