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Avon Products Inc (NYSE:AVP)
Beneish M-Score
-2.96 (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 -2.96 suggests that the company is not a manipulator.

AVP' s 10-Year Beneish M-Score Range
Min: -2.96   Max: -2.01
Current: -2.96

-2.96
-2.01

During the past 13 years, the highest Beneish M-Score of Avon Products Inc was -2.01. The lowest was -2.96. And the median was -2.48.


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 * 0.9164+0.528 * 0.9853+0.404 * 0.9556+0.892 * 0.9421+0.115 * 0.8805
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0285+4.679 * -0.065-0.327 * 1.0201
=-2.96

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

This Year (Dec13) TTM:Last Year (Dec12) TTM:
Accounts Receivable was $763 Mil.
Revenue was 2667.2 + 2322.9 + 2508.9 + 2483.7 = $9,983 Mil.
Gross Profit was 1627.2 + 1451.2 + 1573.5 + 1542.1 = $6,194 Mil.
Total Current Assets was $3,479 Mil.
Total Assets was $6,492 Mil.
Property, Plant and Equipment(Net PPE) was $1,393 Mil.
Depreciation, Depletion and Amortization(DDA) was $225 Mil.
Selling, General & Admin. Expense(SGA) was $5,727 Mil.
Total Current Liabilities was $2,241 Mil.
Long-Term Debt was $2,586 Mil.
Net Income was -69.1 + -5.5 + 31.9 + -13.7 = $-56 Mil.
Non Operating Income was -14.3 + -9.7 + -28.6 + -117.4 = $-170 Mil.
Cash Flow from Operations was 443.3 + 23.1 + 188.1 + -118.9 = $536 Mil.
Accounts Receivable was $884 Mil.
Revenue was 2952.2 + 2510.6 + 2558.2 + 2575.4 = $10,596 Mil.
Gross Profit was 1764.7 + 1539.4 + 1608.5 + 1565.6 = $6,478 Mil.
Total Current Assets was $3,929 Mil.
Total Assets was $7,383 Mil.
Property, Plant and Equipment(Net PPE) was $1,526 Mil.
Depreciation, Depletion and Amortization(DDA) was $213 Mil.
Selling, General & Admin. Expense(SGA) was $5,910 Mil.
Total Current Liabilities was $2,705 Mil.
Long-Term Debt was $2,676 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)
=(762.9 / 9982.7) / (883.7 / 10596.4)
=0.07642221 / 0.08339625
=0.9164

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)
=(1451.2 / 10596.4) / (1627.2 / 9982.7)
=0.61135857 / 0.62047342
=0.9853

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 - (3479.1 + 1393.3) / 6492.3) / (1 - (3928.9 + 1526) / 7382.5)
=0.24951096 / 0.26110396
=0.9556

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
=9982.7 / 10596.4
=0.9421

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))
=(212.5 / (212.5 + 1526)) / (224.6 / (224.6 + 1393.3))
=0.12223181 / 0.13882193
=0.8805

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)
=(5726.6 / 9982.7) / (5910.4 / 10596.4)
=0.57365242 / 0.55777434
=1.0285

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)
=((2586 + 2240.5) / 6492.3) / ((2675.8 + 2704.6) / 7382.5)
=0.74341913 / 0.72880461
=1.0201

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
=(-56.4 - -170 - 535.6) / 6492.3
=-0.065

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 -2.96 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 0.95681.00621.03740.9910.80431.16621.01380.88661.24070.9159
GMI 0.99041.00981.01871.00120.9571.00870.99550.99271.03450.9846
AQI 1.08281.10010.92281.05211.19670.87121.55631.01930.97820.9556
SGI 1.13191.05191.06481.14541.07560.95461.06441.03950.93530.9426
DEPI 1.15720.99270.92571.06760.97061.14680.99730.80811.08230.8805
SGAI 0.99931.02511.10940.97950.97991.04221.00491.00841.0451.0292
LVGI 0.86031.14931.02861.09840.96390.93121.0030.99131.05371.0201
TATA -0.002-0.0084-0.0766-0.00920.0271-0.0218-0.0052-0.0138-0.0801-0.065
M-score -2.32-2.48-2.80-2.40-2.40-2.48-2.21-2.63-2.70-2.96

Avon Products Inc Quarterly Data

Sep11Dec11Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13
DSRI 0.96810.88660.92980.88791.03551.23661.04561.01350.94680.9164
GMI 0.99210.99271.01161.0221.03111.03471.0181.01230.99760.9853
AQI 0.98741.01931.00111.01411.01110.97820.92241.02290.93850.9556
SGI 1.07081.03951.01740.97040.93560.93840.93480.95570.96070.9421
DEPI 0.77040.80810.83720.85650.99391.08231.09170.98050.91690.8805
SGAI 1.00861.00841.02071.04111.05041.04531.0170.98290.98671.0285
LVGI 0.970.99131.01371.06791.03851.05371.06031.00571.01731.0201
TATA 0.0183-0.0138-0.0278-0.0378-0.0615-0.0801-0.0579-0.0849-0.068-0.065
M-score -2.39-2.63-2.68-2.81-2.79-2.70-2.80-2.89-2.92-2.96
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