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Avon Products Inc (NYSE:AVP)
Beneish M-Score
-4.07 (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 -4.07 suggests that the company is not a manipulator.

AVP' s Beneish M-Score Range Over the Past 10 Years
Min: -4.46   Max: -1.99
Current: -4.07

-4.46
-1.99

During the past 13 years, the highest Beneish M-Score of Avon Products Inc was -1.99. The lowest was -4.46. And the median was -2.54.


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 * 1.0771+0.528 * 1.0228+0.404 * 0.8818+0.892 * 0.8265+0.115 * 0.8788
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0271+4.679 * -0.2982-0.327 * 1.1605
=-4.07

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

This Year (Jun16) TTM:Last Year (Jun15) TTM:
Accounts Receivable was $466 Mil.
Revenue was 1434.3 + 1306.5 + 876 + 1666.9 = $5,284 Mil.
Gross Profit was 869.3 + 787.7 + 504 + 1014.2 = $3,175 Mil.
Total Current Assets was $2,194 Mil.
Total Assets was $3,638 Mil.
Property, Plant and Equipment(Net PPE) was $743 Mil.
Depreciation, Depletion and Amortization(DDA) was $115 Mil.
Selling, General & Admin. Expense(SGA) was $2,955 Mil.
Total Current Liabilities was $1,492 Mil.
Long-Term Debt was $2,140 Mil.
Net Income was 33 + -165.9 + -333.4 + -697 = $-1,163 Mil.
Non Operating Income was 4.7 + -137.2 + -25.4 + 11.3 = $-147 Mil.
Cash Flow from Operations was 61.1 + -191.3 + 188.1 + 10.2 = $68 Mil.
Accounts Receivable was $524 Mil.
Revenue was 1564.9 + 1552.1 + 1137.6 + 2138.2 = $6,393 Mil.
Gross Profit was 953.9 + 940.4 + 710.7 + 1324.3 = $3,929 Mil.
Total Current Assets was $2,863 Mil.
Total Assets was $4,989 Mil.
Property, Plant and Equipment(Net PPE) was $1,036 Mil.
Depreciation, Depletion and Amortization(DDA) was $139 Mil.
Selling, General & Admin. Expense(SGA) was $3,481 Mil.
Total Current Liabilities was $2,088 Mil.
Long-Term Debt was $2,204 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)
=(466.2 / 5283.7) / (523.7 / 6392.8)
=0.08823362 / 0.08192029
=1.0771

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)
=(3929.3 / 6392.8) / (3175.2 / 5283.7)
=0.6146446 / 0.60094252
=1.0228

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 - (2194.2 + 743.3) / 3638.1) / (1 - (2862.7 + 1036.4) / 4988.6)
=0.19257305 / 0.21839795
=0.8818

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
=5283.7 / 6392.8
=0.8265

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))
=(138.8 / (138.8 + 1036.4)) / (115.4 / (115.4 + 743.3))
=0.11810756 / 0.13438919
=0.8788

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)
=(2954.6 / 5283.7) / (3480.5 / 6392.8)
=0.55919148 / 0.54444062
=1.0271

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)
=((2139.6 + 1492.1) / 3638.1) / ((2203.6 + 2087.5) / 4988.6)
=0.99824084 / 0.86018121
=1.1605

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
=(-1163.3 - -146.6 - 68.1) / 3638.1
=-0.2982

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 -4.07 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

Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15
DSRI 1.03740.9910.80431.16621.01380.90191.0381.11770.8471.0667
GMI 1.01871.00120.9571.00870.99550.99091.03640.97591.03251.0063
AQI 0.92281.05211.19670.87121.55631.01930.97820.9781.04640.7442
SGI 1.06481.14541.07560.95461.06441.02180.95150.80450.90010.8055
DEPI 0.92571.06760.97061.14680.99730.86671.00911.02960.84540.9946
SGAI 1.10940.97950.97991.04221.00491.01171.04151.00090.98561.0456
LVGI 1.02861.09840.96390.93121.0030.99131.05371.00881.11211.3729
TATA -0.0582-0.00920.0271-0.0218-0.0052-0.0138-0.0801-0.055-0.0961-0.3109
M-score -2.72-2.40-2.40-2.48-2.21-2.63-2.88-2.82-3.18-4.28

Avon Products Inc Quarterly Data

Mar14Jun14Sep14Dec14Mar15Jun15Sep15Dec15Mar16Jun16
DSRI 1.08421.20921.13390.8470.94431.02131.03911.1611.08861.0771
GMI 1.00721.00651.01391.03250.98410.99340.9961.00651.03051.0228
AQI 1.11961.0221.06831.04640.92190.78130.4180.74420.7370.8818
SGI 0.7850.7580.75380.90010.85310.80880.76710.740.77170.8265
DEPI 1.05181.2761.30860.84540.88910.91590.84280.99460.9550.8788
SGAI 1.02931.06621.03220.98560.98030.940.99421.04011.01141.0271
LVGI 1.02851.04161.0451.11211.1391.14661.36791.37291.19451.1605
TATA -0.0932-0.0859-0.0867-0.0961-0.1026-0.0915-0.3056-0.311-0.3011-0.2982
M-score -2.99-2.89-2.93-3.18-3.24-3.20-4.46-4.25-4.17-4.07
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