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Avon Products Inc (NYSE:AVP)
Beneish M-Score
-4.19 (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 -4.19 suggests that the company is not a manipulator.

AVP' s Beneish M-Score Range Over the Past 10 Years
Min: -4.47   Max: -1.99
Current: -4.19

-4.47
-1.99

During the past 13 years, the highest Beneish M-Score of Avon Products Inc was -1.99. The lowest was -4.47. 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 * 1.039+0.528 * 1.0304+0.404 * 0.737+0.892 * 0.8085+0.115 * 0.955
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0142+4.679 * -0.3012-0.327 * 1.1945
=-4.19

* 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 $118 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 + 67.6 = $78 Mil.
Accounts Receivable was $509 Mil.
Revenue was 1552.1 + 1137.6 + 2138.2 + 2188.6 = $7,017 Mil.
Gross Profit was 940.4 + 710.7 + 1324.3 + 1377.9 = $4,353 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 $158 Mil.
Selling, General & Admin. Expense(SGA) was $3,901 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 / 7016.5)
=0.07543012 / 0.0726003
=1.039

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)
=(4353.3 / 7016.5) / (3415.9 / 5672.8)
=0.62043754 / 0.60215414
=1.0304

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 / 7016.5
=0.8085

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))
=(158.1 / (158.1 + 1057.8)) / (118 / (118 + 748.7))
=0.13002714 / 0.13614861
=0.955

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) / (3901 / 7016.5)
=0.56384854 / 0.5559752
=1.0142

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 - 77.6) / 3629.1
=-0.3012

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 -4.19 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 1.03740.9910.80431.14621.03150.88661.04060.96810.85741.2345
GMI 1.01871.00120.9571.00810.99610.99271.03540.98381.02711.0027
AQI 0.92281.05211.19670.87121.55631.01930.97820.9781.04640.7442
SGI 1.06481.14541.07560.97131.04621.03950.94910.92890.88910.696
DEPI 0.9351.06760.97061.11621.02460.80811.01160.94210.88611.1094
SGAI 1.10940.97950.97991.04381.00331.00841.04571.02850.97481.028
LVGI 1.02861.09840.96390.93121.0030.99131.05371.00881.11211.3729
TATA -0.0582-0.00920.0271-0.0219-0.0052-0.0138-0.0801-0.065-0.1088-0.3109
M-score -2.72-2.40-2.40-2.49-2.21-2.63-2.88-2.91-3.23-4.21

Avon Products Inc Quarterly Data

Dec13Mar14Jun14Sep14Dec14Mar15Jun15Sep15Dec15Mar16
DSRI 1.12141.08421.20921.13390.8470.94430.98160.99571.11031.039
GMI 0.97571.00721.00651.01391.03250.98410.9940.99651.00641.0304
AQI 0.9781.11961.0221.06831.04640.92190.78130.4180.74420.737
SGI 0.80190.7850.7580.75380.90010.85310.84150.80060.77380.8085
DEPI 1.02961.05181.2761.30860.84540.88910.84910.84280.99460.955
SGAI 1.00061.02931.06621.03220.98560.98030.94340.99661.0421.0142
LVGI 1.00881.02851.04161.0451.11211.1391.14661.36791.37291.1945
TATA -0.055-0.0932-0.0859-0.0867-0.0961-0.1026-0.091-0.3056-0.311-0.3012
M-score -2.82-2.99-2.89-2.93-3.18-3.24-3.21-4.47-4.27-4.19
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