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Avon Products Inc (NYSE:AVP)
Beneish M-Score
-3.20 (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 -3.20 suggests that the company is not a manipulator.

AVP' s 10-Year Beneish M-Score Range
Min: -3.2   Max: -2.01
Current: -3.2

-3.2
-2.01

During the past 13 years, the highest Beneish M-Score of Avon Products Inc was -2.01. The lowest was -3.20. And the median was -2.49.


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 * 0.9371+0.528 * 1.0271+0.404 * 0.9271+0.892 * 0.8891+0.115 * 1.0261
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9748+4.679 * -0.1108-0.327 * 1.1162
=-3.20

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

This Year (Dec14) TTM:Last Year (Dec13) TTM:
Accounts Receivable was $564 Mil.
Revenue was 2341 + 2138.2 + 2188.6 + 2183.6 = $8,851 Mil.
Gross Profit was 1421.7 + 1324.3 + 1377.9 + 1228.2 = $5,352 Mil.
Total Current Assets was $2,965 Mil.
Total Assets was $5,497 Mil.
Property, Plant and Equipment(Net PPE) was $1,231 Mil.
Depreciation, Depletion and Amortization(DDA) was $193 Mil.
Selling, General & Admin. Expense(SGA) was $4,952 Mil.
Total Current Liabilities was $2,047 Mil.
Long-Term Debt was $2,464 Mil.
Net Income was -330.7 + 91.4 + 19 + -168.3 = $-389 Mil.
Non Operating Income was -50.8 + -19.8 + -2.6 + -66.4 = $-140 Mil.
Cash Flow from Operations was 234 + 132.9 + 105.5 + -112.6 = $360 Mil.
Accounts Receivable was $676 Mil.
Revenue was 2667.2 + 2322.9 + 2508.9 + 2456 = $9,955 Mil.
Gross Profit was 1627.2 + 1451.2 + 1573.5 + 1530.6 = $6,183 Mil.
Total Current Assets was $3,441 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 $5,713 Mil.
Total Current Liabilities was $2,241 Mil.
Long-Term Debt was $2,533 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)
=(563.5 / 8851.4) / (676.3 / 9955)
=0.06366225 / 0.06793571
=0.9371

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)
=(1324.3 / 9955) / (1421.7 / 8851.4)
=0.6210447 / 0.60466141
=1.0271

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 - (2964.5 + 1231) / 5496.8) / (1 - (3441.2 + 1393.3) / 6492.3)
=0.23673774 / 0.25534864
=0.9271

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
=8851.4 / 9955
=0.8891

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))
=(224.6 / (224.6 + 1393.3)) / (192.6 / (192.6 + 1231))
=0.13882193 / 0.13529081
=1.0261

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)
=(4952 / 8851.4) / (5713.2 / 9955)
=0.55945952 / 0.57390256
=0.9748

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)
=((2463.9 + 2047.2) / 5496.8) / ((2532.7 + 2240.5) / 6492.3)
=0.82067749 / 0.7352094
=1.1162

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
=(-388.6 - -139.6 - 359.8) / 5496.8
=-0.1108

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 -3.20 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

Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14Dec14
DSRI 1.03551.05251.04841.01620.94940.95720.9211.02090.95380.9371
GMI 1.03111.03471.01711.01140.99670.98441.01271.01211.01921.0271
AQI 1.01110.97820.92241.02290.93850.9781.11961.0221.06830.9271
SGI 0.93560.93840.93230.95320.95810.93950.92420.89780.89630.8891
DEPI 0.99391.08231.09730.98050.91690.88050.89271.06861.08721.0261
SGAI 1.05041.04531.01730.98320.9871.02891.05631.09111.0610.9748
LVGI 1.03851.05371.06031.00571.01731.00881.02851.04161.0451.1162
TATA -0.0615-0.0801-0.0581-0.0849-0.068-0.065-0.1039-0.0965-0.0974-0.1108
M-score -2.79-2.87-2.80-2.89-2.92-2.92-3.08-3.01-3.05-3.20
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