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Avon Products Inc (NYSE:AVP)
Beneish M-Score
-4.12 (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 -4.12 suggests that the company is not a manipulator.

AVP' s Beneish M-Score Range Over the Past 10 Years
Min: -4.55   Max: -1.99
Current: -4.12

-4.55
-1.99

During the past 13 years, the highest Beneish M-Score of Avon Products Inc was -1.99. The lowest was -4.55. 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 * 1.253+0.528 * 1.0226+0.404 * 0.737+0.892 * 0.6704+0.115 * 1.1504
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9946+4.679 * -0.3069-0.327 * 1.1945
=-4.12

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

This Year (Mar16) TTM:Last Year (Mar15) TTM:
Accounts Receivable was $428 Mil.
Revenue was 1306.5 + 876 + 1666.9 + 1823.4 = $5,673 Mil.
Gross Profit was 787.7 + 504 + 1014.2 + 1110 = $3,416 Mil.
Total Current Assets was $2,210 Mil.
Total Assets was $3,629 Mil.
Property, Plant and Equipment(Net PPE) was $749 Mil.
Depreciation, Depletion and Amortization(DDA) was $112 Mil.
Selling, General & Admin. Expense(SGA) was $3,199 Mil.
Total Current Liabilities was $1,605 Mil.
Long-Term Debt was $2,145 Mil.
Net Income was -165.9 + -333.4 + -697 + 28.8 = $-1,168 Mil.
Non Operating Income was -137.2 + -25.4 + 11.3 + -0.8 = $-152 Mil.
Cash Flow from Operations was -191.3 + 188.1 + 13.2 + 88.2 = $98 Mil.
Accounts Receivable was $509 Mil.
Revenue was 1794.2 + 2341 + 2138.2 + 2188.6 = $8,462 Mil.
Gross Profit was 1086.9 + 1421.7 + 1324.3 + 1377.9 = $5,211 Mil.
Total Current Assets was $2,593 Mil.
Total Assets was $4,872 Mil.
Property, Plant and Equipment(Net PPE) was $1,058 Mil.
Depreciation, Depletion and Amortization(DDA) was $187 Mil.
Selling, General & Admin. Expense(SGA) was $4,797 Mil.
Total Current Liabilities was $2,007 Mil.
Long-Term Debt was $2,208 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)
=(427.9 / 5672.8) / (509.4 / 8462)
=0.07543012 / 0.06019853
=1.253

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)
=(504 / 8462) / (787.7 / 5672.8)
=0.61578823 / 0.60215414
=1.0226

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 - (2209.7 + 748.7) / 3629.1) / (1 - (2592.7 + 1057.8) / 4872.3)
=0.18481166 / 0.25076453
=0.737

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
=5672.8 / 8462
=0.6704

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))
=(186.9 / (186.9 + 1057.8)) / (112.4 / (112.4 + 748.7))
=0.15015666 / 0.13053072
=1.1504

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)
=(3198.6 / 5672.8) / (4797.4 / 8462)
=0.56384854 / 0.56693453
=0.9946

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)
=((2145 + 1605.1) / 3629.1) / ((2208.2 + 2006.8) / 4872.3)
=1.0333416 / 0.86509451
=1.1945

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
=(-1167.5 - -152.1 - 98.2) / 3629.1
=-0.3069

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 -4.12 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 1.03740.9910.80431.16721.01290.88661.04030.96830.93711.1296
GMI 1.01871.00120.9571.00810.99610.99271.03540.98381.02711.0027
AQI 0.92281.05211.19670.8441.60661.01930.96590.96770.94880.84
SGI 1.06481.14541.07560.97131.04621.03950.94910.92890.88910.696
DEPI 0.9351.06760.97061.15720.98830.80811.02550.92931.02610.9581
SGAI 1.10940.97950.97991.04381.00331.00841.04571.02850.97481.028
LVGI 1.02861.09840.96390.93191.00230.99131.04351.031.10391.3678
TATA -0.0582-0.00920.0271-0.0218-0.0052-0.0138-0.0801-0.065-0.1108-0.3109
M-score -2.72-2.40-2.40-2.48-2.21-2.63-2.88-2.92-3.19-4.28

Avon Products Inc Quarterly Data

Dec13Mar14Jun14Sep14Dec14Mar15Jun15Sep15Dec15Mar16
DSRI 0.96560.9341.03210.96070.93970.92180.95510.95941.12961.253
GMI 0.98461.0111.01081.01851.02620.98620.99460.99671.00271.0226
AQI 0.96771.11961.0221.06830.94880.92190.78130.4180.840.737
SGI 0.93150.91130.8880.88980.88670.87390.86480.83090.6960.6704
DEPI 0.92930.96571.10111.10061.02610.90280.89630.88840.95811.1504
SGAI 1.02811.05621.09121.06180.97530.9740.94410.98761.0280.9946
LVGI 1.031.02851.04161.0451.10391.1391.14661.36791.36781.1945
TATA -0.065-0.1042-0.0965-0.0974-0.1108-0.1127-0.105-0.3242-0.3109-0.3069
M-score -2.92-3.08-3.00-3.05-3.19-3.28-3.27-4.55-4.28-4.12
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