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Avon Products Inc (NYSE:AVP)
Beneish M-Score
-3.27 (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 -3.27 suggests that the company is not a manipulator.

AVP' s 10-Year Beneish M-Score Range
Min: -3.28   Max: -2.01
Current: -3.27

-3.28
-2.01

During the past 13 years, the highest Beneish M-Score of Avon Products Inc was -2.01. The lowest was -3.28. 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 * 0.9551+0.528 * 0.9946+0.404 * 0.7813+0.892 * 0.8648+0.115 * 0.8963
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9441+4.679 * -0.105-0.327 * 1.1466
=-3.27

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

This Year (Jun15) TTM:Last Year (Jun14) TTM:
Accounts Receivable was $524 Mil.
Revenue was 1823.4 + 1794.2 + 2341 + 2138.2 = $8,097 Mil.
Gross Profit was 1110 + 1086.9 + 1421.7 + 1324.3 = $4,943 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 $175 Mil.
Selling, General & Admin. Expense(SGA) was $4,531 Mil.
Total Current Liabilities was $2,088 Mil.
Long-Term Debt was $2,204 Mil.
Net Income was 28.8 + -147.3 + -330.7 + 91.4 = $-358 Mil.
Non Operating Income was -0.8 + -19.4 + -50.8 + -19.8 = $-91 Mil.
Cash Flow from Operations was 88.2 + -198.1 + 234 + 132.9 = $257 Mil.
Accounts Receivable was $634 Mil.
Revenue was 2188.6 + 2183.6 + 2667.2 + 2322.9 = $9,362 Mil.
Gross Profit was 1377.9 + 1228.2 + 1627.2 + 1451.2 = $5,685 Mil.
Total Current Assets was $3,041 Mil.
Total Assets was $6,115 Mil.
Property, Plant and Equipment(Net PPE) was $1,365 Mil.
Depreciation, Depletion and Amortization(DDA) was $203 Mil.
Selling, General & Admin. Expense(SGA) was $5,549 Mil.
Total Current Liabilities was $2,108 Mil.
Long-Term Debt was $2,480 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)
=(523.7 / 8096.8) / (634 / 9362.3)
=0.06467987 / 0.0677184
=0.9551

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)
=(1086.9 / 9362.3) / (1110 / 8096.8)
=0.60716918 / 0.61047574
=0.9946

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 - (2862.7 + 1036.4) / 4988.6) / (1 - (3040.5 + 1365.3) / 6115.2)
=0.21839795 / 0.27953297
=0.7813

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
=8096.8 / 9362.3
=0.8648

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))
=(202.5 / (202.5 + 1365.3)) / (174.5 / (174.5 + 1036.4))
=0.12916188 / 0.14410769
=0.8963

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)
=(4530.9 / 8096.8) / (5549.1 / 9362.3)
=0.55959144 / 0.59270692
=0.9441

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)
=((2203.6 + 2087.5) / 4988.6) / ((2480 + 2107.5) / 6115.2)
=0.86018121 / 0.75017988
=1.1466

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
=(-357.8 - -90.8 - 257) / 4988.6
=-0.105

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 -3.27 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

Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14
DSRI 1.00621.03740.9910.80431.16621.01380.88661.05590.9540.9371
GMI 1.00981.01871.00120.9571.00870.99550.99271.03450.98461.0271
AQI 1.10010.92281.05211.19670.87121.55631.01930.97820.9780.9271
SGI 1.05191.06481.14541.07560.95461.06441.03950.93530.94260.8891
DEPI 0.99270.92571.06760.97061.14680.99730.80811.08230.88051.0261
SGAI 1.02511.10940.97950.97991.04221.00491.00841.0451.02920.9748
LVGI 1.14931.02861.09840.96390.93121.0030.99131.05371.00881.1162
TATA -0.0084-0.0766-0.00920.0271-0.0218-0.0052-0.0138-0.0801-0.065-0.1108
M-score -2.48-2.80-2.40-2.40-2.48-2.21-2.63-2.87-2.92-3.20

Avon Products Inc Quarterly Data

Mar13Jun13Sep13Dec13Mar14Jun14Sep14Dec14Mar15Jun15
DSRI 1.04841.01620.94940.95720.9211.02090.95380.93710.92180.9551
GMI 1.01711.01140.99670.98441.01271.01211.01921.02710.98620.9946
AQI 0.92241.02290.93850.9781.11961.0221.06830.92710.92190.7813
SGI 0.93230.95320.95810.93950.92420.89780.89630.88910.87390.8648
DEPI 1.09730.98050.91690.88050.89271.06861.08721.02610.90710.8963
SGAI 1.01730.98320.9871.02891.05631.09111.0610.97480.9740.9441
LVGI 1.06031.00571.01731.00881.02851.04161.0451.11621.1391.1466
TATA -0.0581-0.0849-0.068-0.065-0.1039-0.0965-0.0974-0.1108-0.1127-0.105
M-score -2.80-2.89-2.92-2.92-3.08-3.01-3.05-3.20-3.28-3.27
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