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Avon Products Inc (NYSE:AVP)
Beneish M-Score
-3.05 (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 -3.05 suggests that the company is not a manipulator.

AVP' s 10-Year Beneish M-Score Range
Min: -3.08   Max: -2.01
Current: -3.05

-3.08
-2.01

During the past 13 years, the highest Beneish M-Score of Avon Products Inc was -2.01. The lowest was -3.08. And the median was -2.50.


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 * 0.9607+0.528 * 1.0185+0.404 * 1.0683+0.892 * 0.8898+0.115 * 1.1006
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0618+4.679 * -0.0974-0.327 * 1.045
=-3.05

* 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 $590 Mil.
Revenue was 2138.2 + 2188.6 + 2183.6 + 2667.2 = $9,178 Mil.
Gross Profit was 1324.3 + 1377.9 + 1228.2 + 1627.2 = $5,558 Mil.
Total Current Assets was $3,089 Mil.
Total Assets was $6,090 Mil.
Property, Plant and Equipment(Net PPE) was $1,300 Mil.
Depreciation, Depletion and Amortization(DDA) was $195 Mil.
Selling, General & Admin. Expense(SGA) was $5,345 Mil.
Total Current Liabilities was $2,153 Mil.
Long-Term Debt was $2,473 Mil.
Net Income was 91.4 + 19 + -168.3 + -69.1 = $-127 Mil.
Non Operating Income was -19.8 + -2.6 + -66.4 + -14.3 = $-103 Mil.
Cash Flow from Operations was 132.9 + 105.5 + -112.6 + 443.3 = $569 Mil.
Accounts Receivable was $690 Mil.
Revenue was 2322.9 + 2508.9 + 2483.7 + 2999.1 = $10,315 Mil.
Gross Profit was 1451.2 + 1573.5 + 1542.1 + 1794.6 = $6,361 Mil.
Total Current Assets was $3,432 Mil.
Total Assets was $6,528 Mil.
Property, Plant and Equipment(Net PPE) was $1,389 Mil.
Depreciation, Depletion and Amortization(DDA) was $232 Mil.
Selling, General & Admin. Expense(SGA) was $5,657 Mil.
Total Current Liabilities was $2,155 Mil.
Long-Term Debt was $2,590 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)
=(590 / 9177.6) / (690.2 / 10314.6)
=0.06428696 / 0.06691486
=0.9607

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)
=(1377.9 / 10314.6) / (1324.3 / 9177.6)
=0.61673744 / 0.60556137
=1.0185

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 - (3089.4 + 1299.7) / 6090.4) / (1 - (3432 + 1389.2) / 6528.3)
=0.27934126 / 0.26149227
=1.0683

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
=9177.6 / 10314.6
=0.8898

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))
=(232.3 / (232.3 + 1389.2)) / (194.5 / (194.5 + 1299.7))
=0.14326241 / 0.13016999
=1.1006

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)
=(5344.6 / 9177.6) / (5657.1 / 10314.6)
=0.58235268 / 0.54845559
=1.0618

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)
=((2472.8 + 2153.1) / 6090.4) / ((2590.2 + 2154.8) / 6528.3)
=0.7595396 / 0.72683547
=1.045

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
=(-127 - -103.1 - 569.1) / 6090.4
=-0.0974

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 -3.05 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.

Avon Products Inc Annual Data

Dec04Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13
DSRI 0.95681.00621.03740.9910.80431.16721.01290.88661.04030.9683
GMI 0.99041.00981.01871.00120.9571.00810.99610.99271.03540.9838
AQI 1.08281.10010.92281.05211.19670.8441.60661.01930.96590.9677
SGI 1.13191.05191.06481.14541.07560.97131.04621.03950.94910.9289
DEPI 1.15720.99270.92571.06760.97061.15720.98830.80811.02550.9293
SGAI 0.99931.02511.10940.97950.97991.04381.00331.00841.04571.0285
LVGI 0.86031.14931.02861.09840.96390.93191.00230.99131.04351.03
TATA -0.002-0.0084-0.0766-0.00920.0271-0.0218-0.0052-0.0138-0.0801-0.065
M-score -2.32-2.48-2.80-2.40-2.40-2.48-2.21-2.63-2.88-2.92

Avon Products Inc Quarterly Data

Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14
DSRI 0.88521.02841.04031.03371.00820.9490.96560.9341.03210.9607
GMI 1.02231.03211.03551.01881.01240.99650.98461.0111.01081.0185
AQI 1.01411.01110.96590.92241.02290.93850.96771.11961.0221.0683
SGI 0.97340.94210.94910.94550.96080.95850.93150.91130.8880.8898
DEPI 0.82210.94381.02551.01920.98390.95380.92930.96571.10111.1006
SGAI 1.04161.05131.04561.01750.98260.98541.02811.05621.09121.0618
LVGI 1.06791.03851.04351.06031.00571.01731.031.02851.04161.045
TATA -0.0395-0.0631-0.0801-0.0578-0.0848-0.068-0.065-0.1042-0.0965-0.0974
M-score -2.83-2.81-2.88-2.81-2.89-2.92-2.92-3.08-3.00-3.05
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