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Avery Dennison Corp (NYSE:AVY)
Beneish M-Score
-2.80 (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 -2.80 suggests that the company is not a manipulator.

AVY' s 10-Year Beneish M-Score Range
Min: -3.79   Max: -2.21
Current: -2.8

-3.79
-2.21

During the past 13 years, the highest Beneish M-Score of Avery Dennison Corp was -2.21. The lowest was -3.79. 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 * 0.9142+0.528 * 0.9869+0.404 * 1.0084+0.892 * 0.9926+0.115 * 0.9585
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9715+4.679 * -0.0461-0.327 * 1.0408
=-2.80

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

This Year (Jun15) TTM:Last Year (Jun14) TTM:
Accounts Receivable was $1,011 Mil.
Revenue was 1516 + 1528 + 1604.8 + 1559.6 = $6,208 Mil.
Gross Profit was 417.6 + 430 + 415.1 + 400.7 = $1,663 Mil.
Total Current Assets was $1,998 Mil.
Total Assets was $4,354 Mil.
Property, Plant and Equipment(Net PPE) was $852 Mil.
Depreciation, Depletion and Amortization(DDA) was $199 Mil.
Selling, General & Admin. Expense(SGA) was $1,136 Mil.
Total Current Liabilities was $1,551 Mil.
Long-Term Debt was $970 Mil.
Net Income was 63.3 + 71.6 + 70.9 + 64.3 = $270 Mil.
Non Operating Income was -27.7 + -14.3 + -14.6 + -7.8 = $-64 Mil.
Cash Flow from Operations was 162.6 + 8.3 + 174 + 190.4 = $535 Mil.
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.



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)
=(1011.4 / 6208.4) / (1114.6 / 6254.7)
=0.16290832 / 0.17820199
=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)
=(430 / 6254.7) / (417.6 / 6208.4)
=0.26442515 / 0.26792732
=0.9869

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 - (1998.1 + 851.7) / 4353.6) / (1 - (2129.9 + 905.3) / 4616.6)
=0.34541529 / 0.34254646
=1.0084

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
=6208.4 / 6254.7
=0.9926

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))
=(200.7 / (200.7 + 905.3)) / (198.9 / (198.9 + 851.7))
=0.18146474 / 0.18932039
=0.9585

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)
=(1136.3 / 6208.4) / (1178.3 / 6254.7)
=0.18302622 / 0.18838633
=0.9715

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)
=((969.5 + 1550.8) / 4353.6) / ((945.2 + 1622.7) / 4616.6)
=0.57890022 / 0.55623186
=1.0408

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
=(270.1 - -64.4 - 535.3) / 4353.6
=-0.0461

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 -2.80 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 0.94491.03511.08170.83461.04711.11640.84481.13990.99790.9142
GMI 1.09780.97821.01011.0610.96561.0181.0370.96870.97711.0226
AQI 0.95290.95681.35251.04150.88440.96550.91120.97611.05331.0358
SGI 1.02941.01871.13131.06380.88710.97131.04230.9731.04721.031
DEPI 0.8931.02731.02190.81750.95371.00540.88171.04170.98310.9697
SGAI 0.86781.00471.03381.03681.09660.95660.9531.00850.980.9504
LVGI 0.98270.95121.14021.0290.990.92520.95681.03970.99881.0736
TATA -0.0361-0.0234-0.0219-0.0393-0.2248-0.0295-0.0374-0.0449-0.0147-0.0131
M-score -2.62-2.55-2.29-2.75-3.67-2.51-2.77-2.62-2.50-2.59

Avery Dennison Corp Quarterly Data

Mar13Jun13Sep13Dec13Mar14Jun14Sep14Dec14Mar15Jun15
DSRI 1.03191.0121.01830.99791.05041.05580.98630.91420.89270.9142
GMI 0.96160.9570.97130.97710.98841.00041.01381.02261.00020.9869
AQI 0.99210.99561.08421.05331.06251.05870.97961.03581.011.0084
SGI 0.99611.01581.0351.04721.04591.04571.04471.0311.01890.9926
DEPI 1.01930.9990.97090.98311.01991.0351.03360.96970.92990.9585
SGAI 1.0181.00460.98380.980.96750.96330.95730.95040.96870.9715
LVGI 1.0241.01260.95260.99880.98550.98331.07571.07361.09081.0408
TATA -0.0271-0.0439-0.0236-0.0147-0.0027-0.0011-0.0326-0.0131-0.0385-0.0461
M-score -2.61-2.69-2.51-2.50-2.37-2.35-2.62-2.59-2.77-2.80
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