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Avery Dennison Corp (NYSE:AVY)
Beneish M-Score
-2.50 (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.

Avery Dennison Corp has a M-score of -2.50 suggests that the company is not a manipulator.

AVY' s 10-Year Beneish M-Score Range
Min: -3.67   Max: -2.28
Current: -2.5

-3.67
-2.28

During the past 13 years, the highest Beneish M-Score of Avery Dennison Corp was -2.28. The lowest was -3.67. And the median was -2.56.


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 Avery Dennison Corp 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 * 0.9979+0.528 * 0.9771+0.404 * 1.0533+0.892 * 1.0472+0.115 * 0.9831
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.98+4.679 * -0.0147-0.327 * 0.9988
=-2.50

* 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 $1,017 Mil.
Revenue was 1583.9 + 1504.9 + 1552.3 + 1498.9 = $6,140 Mil.
Gross Profit was 416.3 + 402.2 + 417.5 + 401.7 = $1,638 Mil.
Total Current Assets was $2,092 Mil.
Total Assets was $4,611 Mil.
Property, Plant and Equipment(Net PPE) was $923 Mil.
Depreciation, Depletion and Amortization(DDA) was $205 Mil.
Selling, General & Admin. Expense(SGA) was $1,179 Mil.
Total Current Liabilities was $1,554 Mil.
Long-Term Debt was $951 Mil.
Net Income was 42.7 + 46.5 + 68.8 + 57.8 = $216 Mil.
Non Operating Income was -3.7 + -25.7 + 0.3 + -7.5 = $-37 Mil.
Cash Flow from Operations was 224.4 + 49 + 112.4 + -65.7 = $320 Mil.
Accounts Receivable was $973 Mil.
Revenue was 1483.1 + 1447 + 1490.4 + 1443 = $5,864 Mil.
Gross Profit was 382 + 381 + 388.1 + 377.1 = $1,528 Mil.
Total Current Assets was $2,412 Mil.
Total Assets was $5,105 Mil.
Property, Plant and Equipment(Net PPE) was $1,016 Mil.
Depreciation, Depletion and Amortization(DDA) was $221 Mil.
Selling, General & Admin. Expense(SGA) was $1,149 Mil.
Total Current Liabilities was $2,075 Mil.
Long-Term Debt was $702 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)
=(1016.5 / 6140) / (972.8 / 5863.5)
=0.16555375 / 0.16590773
=0.9979

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)
=(402.2 / 5863.5) / (416.3 / 6140)
=0.26062932 / 0.26672638
=0.9771

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 - (2091.8 + 922.5) / 4610.6) / (1 - (2411.7 + 1015.5) / 5105.3)
=0.34622392 / 0.32869763
=1.0533

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
=6140 / 5863.5
=1.0472

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))
=(220.6 / (220.6 + 1015.5)) / (204.6 / (204.6 + 922.5))
=0.17846453 / 0.18152781
=0.9831

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)
=(1179 / 6140) / (1148.9 / 5863.5)
=0.19201954 / 0.19594099
=0.98

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)
=((950.6 + 1554.1) / 4610.6) / ((702.2 + 2074.5) / 5105.3)
=0.54324817 / 0.54388577
=0.9988

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
=(215.8 - -36.6 - 320.1) / 4610.6
=-0.0147

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.

Avery Dennison Corp has a M-score of -2.50 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.

Avery Dennison Corp Annual Data

Dec04Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13
DSRI 0.94880.94491.03511.08170.83461.04711.11640.84481.13990.9979
GMI 1.03621.09780.97821.01011.0610.96561.0181.0370.96870.9771
AQI 1.0070.95290.95681.35251.04150.88440.96550.91120.97611.0533
SGI 1.12251.02941.01871.13131.06380.88710.97131.04230.9731.0472
DEPI 1.02130.8931.02731.02190.81750.95371.00540.88171.04170.9831
SGAI 0.95990.86781.00471.03381.03681.09660.95660.9531.00850.98
LVGI 0.93790.98270.95121.14021.0290.990.92520.95681.03970.9988
TATA -0.0459-0.0361-0.0234-0.0219-0.0393-0.2248-0.0295-0.0374-0.0449-0.0147
M-score -2.58-2.62-2.55-2.29-2.75-3.67-2.51-2.77-2.62-2.50

Avery Dennison Corp Quarterly Data

Sep11Dec11Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13
DSRI 1.16270.84480.86850.82720.87511.13991.03191.0121.01830.9979
GMI 1.19221.0371.01460.96920.91480.96870.96160.9570.97130.9771
AQI 1.04760.91120.92430.91790.88420.97610.99210.99561.08421.0533
SGI 0.85631.04231.03281.0481.06520.9730.99611.01581.0351.0472
DEPI 0.99380.88170.87150.88890.93851.04171.01930.9990.97090.9831
SGAI 0.88580.9530.96080.9961.03951.00851.0181.00460.98380.98
LVGI 0.9390.95680.98421.0321.05061.03971.0241.01260.95260.9988
TATA -0.0024-0.0374-0.0615-0.0645-0.0532-0.0449-0.0271-0.0439-0.0236-0.0147
M-score -2.31-2.77-2.89-2.97-2.91-2.62-2.61-2.69-2.51-2.50
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