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Avery Dennison Corp (NYSE:AVY)
Beneish M-Score
-2.59 (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 -2.59 suggests that the company is not a manipulator.

AVY' s 10-Year Beneish M-Score Range
Min: -2.89   Max: -2.28
Current: -2.59

-2.89
-2.28

During the past 13 years, the highest Beneish M-Score of Avery Dennison Corp was -2.28. The lowest was -2.89. And the median was -2.57.


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 * 0.9142+0.528 * 1.0226+0.404 * 1.0358+0.892 * 1.031+0.115 * 0.9697
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9504+4.679 * -0.0131-0.327 * 1.0736
=-2.59

* 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 $958 Mil.
Revenue was 1604.8 + 1559.6 + 1615.8 + 1550.1 = $6,330 Mil.
Gross Profit was 415.1 + 400.7 + 428.2 + 407.2 = $1,651 Mil.
Total Current Assets was $1,921 Mil.
Total Assets was $4,360 Mil.
Property, Plant and Equipment(Net PPE) was $875 Mil.
Depreciation, Depletion and Amortization(DDA) was $202 Mil.
Selling, General & Admin. Expense(SGA) was $1,155 Mil.
Total Current Liabilities was $1,598 Mil.
Long-Term Debt was $945 Mil.
Net Income was 70.9 + 64.3 + 42.5 + 71.2 = $249 Mil.
Non Operating Income was -14.6 + -7.8 + -38.5 + -7.3 = $-68 Mil.
Cash Flow from Operations was 174 + 190.4 + 117.8 + -108 = $374 Mil.
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.



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)
=(958.1 / 6330.3) / (1016.5 / 6140)
=0.15135144 / 0.16555375
=0.9142

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)
=(400.7 / 6140) / (415.1 / 6330.3)
=0.26672638 / 0.26084072
=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 - (1921.3 + 875.3) / 4360.2) / (1 - (2091.8 + 922.5) / 4610.6)
=0.3586074 / 0.34622392
=1.0358

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
=6330.3 / 6140
=1.031

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))
=(204.6 / (204.6 + 922.5)) / (201.6 / (201.6 + 875.3))
=0.18152781 / 0.18720401
=0.9697

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)
=(1155.3 / 6330.3) / (1179 / 6140)
=0.1825032 / 0.19201954
=0.9504

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)
=((945.3 + 1597.8) / 4360.2) / ((950.6 + 1554.1) / 4610.6)
=0.58325306 / 0.54324817
=1.0736

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
=(248.9 - -68.2 - 374.2) / 4360.2
=-0.0131

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 -2.59 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

Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14
DSRI 0.94491.03511.08170.83461.04710.99110.95161.10741.02720.9142
GMI 1.09780.97821.01011.0610.96560.95061.11060.96620.97971.0226
AQI 0.95290.95681.35251.04150.88440.96550.91120.97611.05331.0358
SGI 1.02941.01871.13131.06380.88711.09410.92531.00151.01731.031
DEPI 0.8931.02731.02190.81750.95371.00540.88171.04170.98310.9697
SGAI 0.86781.00471.03381.03681.09660.98720.92341.00570.98270.9504
LVGI 0.98270.95121.14021.0290.990.92520.95681.03970.99881.0736
TATA -0.0361-0.0234-0.0219-0.0393-0.2248-0.0279-0.0374-0.0448-0.0147-0.0131
M-score -2.62-2.55-2.29-2.75-3.67-2.55-2.73-2.63-2.50-2.59

Avery Dennison Corp Quarterly Data

Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14Dec14
DSRI 1.15061.10740.99370.95790.94261.02721.07381.07170.99430.9142
GMI 1.090.96620.94550.92290.92520.97970.99081.00221.01541.0226
AQI 0.88420.97610.99210.99561.08421.05331.06251.05870.97961.0358
SGI 0.81011.00151.03431.07321.11811.01731.02311.03021.03631.031
DEPI 0.93851.04171.01930.9990.97090.98311.01991.0351.03360.9697
SGAI 0.93371.00571.03771.03581.01840.98270.970.96550.95880.9504
LVGI 1.05061.03971.0241.01260.95260.99880.98550.98331.07571.0736
TATA -0.0545-0.0448-0.027-0.0439-0.0236-0.0147-0.0027-0.0011-0.0326-0.0131
M-score -2.78-2.63-2.63-2.71-2.53-2.50-2.37-2.35-2.62-2.59
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