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Avery Dennison Corp (NYSE:AVY)
Beneish M-Score
-2.35 (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 -2.35 suggests that the company is not a manipulator.

AVY' s 10-Year Beneish M-Score Range
Min: -2.99   Max: -2.22
Current: -2.35

-2.99
-2.22

During the past 13 years, the highest Beneish M-Score of Avery Dennison Corp was -2.22. The lowest was -2.99. 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 * 1.0717+0.528 * 1.0022+0.404 * 1.0587+0.892 * 1.0302+0.115 * 1.035
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9655+4.679 * -0.0011-0.327 * 0.9833
=-2.35

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

This Year (Jun14) TTM:Last Year (Jun13) TTM:
Accounts Receivable was $1,115 Mil.
Revenue was 1615.8 + 1550.1 + 1583.9 + 1504.9 = $6,255 Mil.
Gross Profit was 428.2 + 407.2 + 416.3 + 402.2 = $1,654 Mil.
Total Current Assets was $2,130 Mil.
Total Assets was $4,617 Mil.
Property, Plant and Equipment(Net PPE) was $905 Mil.
Depreciation, Depletion and Amortization(DDA) was $201 Mil.
Selling, General & Admin. Expense(SGA) was $1,178 Mil.
Total Current Liabilities was $1,623 Mil.
Long-Term Debt was $945 Mil.
Net Income was 42.5 + 71.2 + 42.7 + 46.5 = $203 Mil.
Non Operating Income was -38.5 + -7.3 + -3.7 + -25.7 = $-75 Mil.
Cash Flow from Operations was 117.8 + -108 + 224.4 + 49 = $283 Mil.
Accounts Receivable was $1,010 Mil.
Revenue was 1552.3 + 1498.9 + 1532.2 + 1487.8 = $6,071 Mil.
Gross Profit was 417.5 + 401.7 + 397.7 + 392 = $1,609 Mil.
Total Current Assets was $2,589 Mil.
Total Assets was $5,191 Mil.
Property, Plant and Equipment(Net PPE) was $922 Mil.
Depreciation, Depletion and Amortization(DDA) was $213 Mil.
Selling, General & Admin. Expense(SGA) was $1,185 Mil.
Total Current Liabilities was $1,985 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)
=(1114.6 / 6254.7) / (1009.5 / 6071.2)
=0.17820199 / 0.16627685
=1.0717

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)
=(407.2 / 6071.2) / (428.2 / 6254.7)
=0.26500527 / 0.26442515
=1.0022

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 - (2129.9 + 905.3) / 4616.6) / (1 - (2589 + 922.4) / 5191)
=0.34254646 / 0.32356001
=1.0587

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
=6254.7 / 6071.2
=1.0302

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))
=(213.3 / (213.3 + 922.4)) / (200.7 / (200.7 + 905.3))
=0.18781368 / 0.18146474
=1.035

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)
=(1178.3 / 6254.7) / (1184.6 / 6071.2)
=0.18838633 / 0.19511793
=0.9655

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)
=((945.2 + 1622.7) / 4616.6) / ((951.4 + 1984.9) / 5191)
=0.55623186 / 0.56565209
=0.9833

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
=(202.9 - -75.2 - 283.2) / 4616.6
=-0.0011

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 -2.35 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 0.94970.94921.03511.08170.83461.04710.99110.95161.10741.0272
GMI 1.03520.99851.08051.00381.0610.96560.95061.11060.96620.9797
AQI 1.00190.95710.96381.34281.04150.88440.96550.91120.97611.0533
SGI 1.12141.02481.01871.13131.06380.88711.09410.92531.00151.0173
DEPI 1.01760.89111.02511.02190.81750.95371.00540.88171.04170.9831
SGAI 0.95850.99370.87621.03381.03681.09660.98720.92341.00570.9827
LVGI 0.93740.98270.95811.13191.0290.990.92520.95681.03970.9988
TATA -0.0459-0.0361-0.025-0.0219-0.0393-0.2248-0.0279-0.0374-0.0448-0.0147
M-score -2.58-2.70-2.48-2.30-2.75-3.67-2.55-2.73-2.63-2.50

Avery Dennison Corp Quarterly Data

Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14
DSRI 1.02111.15061.10740.99370.95790.94261.02721.07381.07170.9943
GMI 1.11691.090.96620.94550.92290.92520.97970.99081.00221.0154
AQI 0.91790.88420.97610.99210.99561.08421.05331.06251.05870.9796
SGI 0.8490.81011.00151.03431.07321.11811.01731.02311.03021.0363
DEPI 0.88890.93851.04171.01930.9990.97090.98311.01991.0351.0336
SGAI 0.90560.93371.00571.03771.03581.01840.98270.970.96550.9588
LVGI 1.0321.05061.03971.0241.01260.95260.99880.98550.98331.0757
TATA -0.0652-0.0545-0.0448-0.027-0.0439-0.0236-0.0147-0.0027-0.0011-0.0326
M-score -2.88-2.78-2.63-2.63-2.71-2.53-2.50-2.37-2.35-2.62
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