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Avery Dennison Corp (NYSE:AVY)
Beneish M-Score
-2.64 (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 -2.64 suggests that the company is not a manipulator.

AVY' s Beneish M-Score Range Over the Past 10 Years
Min: -3.67   Max: -2.28
Current: -2.64

-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 -2.57.


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 * 1.0682+0.528 * 0.9457+0.404 * 1.0203+0.892 * 0.9426+0.115 * 1.0302
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0162+4.679 * -0.0319-0.327 * 1.0081
=-2.64

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

This Year (Dec15) TTM:Last Year (Dec14) TTM:
Accounts Receivable was $965 Mil.
Revenue was 1454.8 + 1468.1 + 1516 + 1528 = $5,967 Mil.
Gross Profit was 392.3 + 405.9 + 417.6 + 430 = $1,646 Mil.
Total Current Assets was $1,775 Mil.
Total Assets was $4,134 Mil.
Property, Plant and Equipment(Net PPE) was $848 Mil.
Depreciation, Depletion and Amortization(DDA) was $188 Mil.
Selling, General & Admin. Expense(SGA) was $1,109 Mil.
Total Current Liabilities was $1,459 Mil.
Long-Term Debt was $964 Mil.
Net Income was 57 + 81.7 + 63.3 + 71.6 = $274 Mil.
Non Operating Income was -19.3 + -7 + -27.7 + -14.3 = $-68 Mil.
Cash Flow from Operations was 183.4 + 119.4 + 162.6 + 8.3 = $474 Mil.
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 $4,357 Mil.
Property, Plant and Equipment(Net PPE) was $875 Mil.
Depreciation, Depletion and Amortization(DDA) was $202 Mil.
Selling, General & Admin. Expense(SGA) was $1,158 Mil.
Total Current Liabilities was $1,593 Mil.
Long-Term Debt was $940 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)
=(964.7 / 5966.9) / (958.1 / 6330.3)
=0.16167524 / 0.15135144
=1.0682

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)
=(405.9 / 6330.3) / (392.3 / 5966.9)
=0.26084072 / 0.27582162
=0.9457

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 - (1775.4 + 847.9) / 4133.7) / (1 - (1921.3 + 875.3) / 4356.9)
=0.36538694 / 0.3581216
=1.0203

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
=5966.9 / 6330.3
=0.9426

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))
=(201.6 / (201.6 + 875.3)) / (188.3 / (188.3 + 847.9))
=0.18720401 / 0.18172168
=1.0302

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)
=(1109.1 / 5966.9) / (1157.9 / 6330.3)
=0.18587541 / 0.18291392
=1.0162

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)
=((963.6 + 1459.1) / 4133.7) / ((940.1 + 1593) / 4356.9)
=0.58608511 / 0.58139962
=1.0081

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
=(273.6 - -68.3 - 473.7) / 4133.7
=-0.0319

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 -2.64 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

Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15
DSRI 1.03511.08170.83461.04710.99110.95161.10741.02720.91421.0682
GMI 1.08051.00381.0610.96560.95061.11060.96620.97971.02260.9457
AQI 0.95681.35251.04150.88440.96550.91120.97611.05331.03441.0203
SGI 1.01871.13131.06380.88711.09410.92531.00151.01731.0310.9426
DEPI 1.02511.02190.81750.95371.00540.88171.04170.98310.96971.0302
SGAI 0.87621.03381.03681.09660.98720.92341.00570.98270.95041.0176
LVGI 0.95121.14021.0290.990.92520.95681.03970.99881.07021.0081
TATA -0.0248-0.0219-0.0393-0.2248-0.0279-0.0374-0.0448-0.0147-0.0131-0.0317
M-score -2.48-2.29-2.75-3.67-2.55-2.73-2.63-2.50-2.58-2.64

Avery Dennison Corp Quarterly Data

Sep13Dec13Mar14Jun14Sep14Dec14Mar15Jun15Sep15Dec15
DSRI 0.98660.99791.05041.05580.98630.91420.89270.91420.94741.0682
GMI 0.97180.97710.98841.00041.01381.02261.00020.98690.96010.9457
AQI 1.08421.05331.06251.05870.97961.03441.011.00841.02511.0203
SGI 1.06821.04721.04591.04571.04471.0311.01890.99260.96950.9426
DEPI 0.97090.98311.01991.0351.03360.96970.92990.95850.96571.0302
SGAI 0.98010.9760.96360.95940.9550.95650.97480.97780.99821.0162
LVGI 0.95260.99880.98550.98331.07571.07021.09081.04081.00011.0081
TATA -0.0236-0.0151-0.0031-0.0016-0.034-0.0097-0.035-0.0427-0.0222-0.0319
M-score -2.51-2.50-2.37-2.35-2.63-2.57-2.75-2.78-2.67-2.64
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