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Avon Products Inc (NYSE:AVP)
Beneish M-Score
-2.58 (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 -2.58 suggests that the company is not a manipulator.

AVP' s Beneish M-Score Range Over the Past 10 Years
Min: -4.44   Max: -1.99
Current: -2.58

-4.44
-1.99

During the past 13 years, the highest Beneish M-Score of Avon Products Inc was -1.99. The lowest was -4.44. And the median was -2.55.


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 * 1.0619+0.528 * 1.0185+0.404 * 1.5728+0.892 * 1.0116+0.115 * 0.8581
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9878+4.679 * -0.0876-0.327 * 0.9402
=-2.58

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

This Year (Sep16) TTM:Last Year (Sep15) TTM:
Accounts Receivable was $505 Mil.
Revenue was 1408.8 + 1434.3 + 1306.5 + 1607.3 = $5,757 Mil.
Gross Profit was 857.9 + 869.3 + 787.7 + 943.6 = $3,459 Mil.
Total Current Assets was $2,442 Mil.
Total Assets was $3,906 Mil.
Property, Plant and Equipment(Net PPE) was $747 Mil.
Depreciation, Depletion and Amortization(DDA) was $114 Mil.
Selling, General & Admin. Expense(SGA) was $3,174 Mil.
Total Current Liabilities was $1,588 Mil.
Long-Term Debt was $2,227 Mil.
Net Income was 36 + 33 + -165.9 + -333.4 = $-430 Mil.
Non Operating Income was -6.5 + 4.7 + -137.2 + -26.2 = $-165 Mil.
Cash Flow from Operations was 25.9 + 61.1 + -191.3 + 181.3 = $77 Mil.
Accounts Receivable was $470 Mil.
Revenue was 1436.2 + 1564.9 + 1552.1 + 1137.6 = $5,691 Mil.
Gross Profit was 877.2 + 953.9 + 940.4 + 710.7 = $3,482 Mil.
Total Current Assets was $2,386 Mil.
Total Assets was $3,775 Mil.
Property, Plant and Equipment(Net PPE) was $948 Mil.
Depreciation, Depletion and Amortization(DDA) was $122 Mil.
Selling, General & Admin. Expense(SGA) was $3,176 Mil.
Total Current Liabilities was $1,726 Mil.
Long-Term Debt was $2,196 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)
=(505.2 / 5756.9) / (470.3 / 5690.8)
=0.08775556 / 0.08264216
=1.0619

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)
=(3482.2 / 5690.8) / (3458.5 / 5756.9)
=0.61189991 / 0.60075735
=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 - (2441.5 + 746.7) / 3905.5) / (1 - (2385.6 + 948.3) / 3774.7)
=0.18366406 / 0.11677749
=1.5728

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
=5756.9 / 5690.8
=1.0116

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))
=(121.6 / (121.6 + 948.3)) / (114 / (114 + 746.7))
=0.11365548 / 0.13245033
=0.8581

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)
=(3173.8 / 5756.9) / (3176 / 5690.8)
=0.55130365 / 0.55809377
=0.9878

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)
=((2226.8 + 1588.4) / 3905.5) / ((2196.3 + 1725.5) / 3774.7)
=0.97687876 / 1.03896998
=0.9402

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
=(-430.3 - -165.2 - 77) / 3905.5
=-0.0876

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 -2.58 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

Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15
DSRI 1.03741.04760.76091.16621.01380.90191.0381.11770.8471.0667
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 1.02861.04661.01150.93121.0030.99131.05371.00881.11211.3729
TATA -0.0582-0.00920.0271-0.0218-0.0052-0.0138-0.0801-0.055-0.0961-0.3109
M-score -2.72-2.33-2.45-2.48-2.21-2.63-2.88-2.82-3.18-4.28

Avon Products Inc Quarterly Data

Jun14Sep14Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16
DSRI 1.20921.13390.8470.94431.02131.08131.06670.99650.98391.0619
GMI 1.00651.01391.03250.98410.99340.99481.00631.03021.02231.0185
AQI 1.0221.06831.04640.92190.78130.4180.74420.7370.88181.5728
SGI 0.7580.75380.90010.85310.80880.73720.80550.8430.90481.0116
DEPI 1.2761.30860.84540.88910.91590.95150.99460.9550.87880.8581
SGAI 1.06621.03220.98560.98030.940.98511.04561.01861.03510.9878
LVGI 1.04161.0451.11211.1391.14661.36791.37291.19451.16050.9402
TATA -0.0859-0.0867-0.0961-0.1026-0.0915-0.3075-0.3109-0.301-0.2981-0.0876
M-score -2.89-2.93-3.18-3.24-3.20-4.44-4.28-4.19-4.08-2.58
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