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Avery Dennison Corp (NYSE:AVY)
Beneish M-Score
-2.69 (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 -2.69 suggests that the company is not a manipulator.

AVY' s Beneish M-Score Range Over the Past 10 Years
Min: -3.79   Max: -2.21
Current: -2.69

-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 -2.57.


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 * 0.9474+0.528 * 0.9601+0.404 * 1.0251+0.892 * 0.9695+0.115 * 0.9657
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.991+4.679 * -0.0258-0.327 * 1.0001
=-2.69

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

This Year (Sep15) TTM:Last Year (Sep14) TTM:
Accounts Receivable was $999 Mil.
Revenue was 1468.1 + 1516 + 1528 + 1604.8 = $6,117 Mil.
Gross Profit was 405.9 + 417.6 + 430 + 415.1 = $1,669 Mil.
Total Current Assets was $1,916 Mil.
Total Assets was $4,249 Mil.
Property, Plant and Equipment(Net PPE) was $841 Mil.
Depreciation, Depletion and Amortization(DDA) was $196 Mil.
Selling, General & Admin. Expense(SGA) was $1,125 Mil.
Total Current Liabilities was $1,470 Mil.
Long-Term Debt was $969 Mil.
Net Income was 81.7 + 63.3 + 71.6 + 74.4 = $291 Mil.
Non Operating Income was -7 + -27.7 + -14.3 + -14.6 = $-64 Mil.
Cash Flow from Operations was 119.4 + 162.6 + 8.3 + 174 = $464 Mil.
Accounts Receivable was $1,088 Mil.
Revenue was 1559.6 + 1615.8 + 1550.1 + 1583.9 = $6,309 Mil.
Gross Profit was 400.7 + 428.2 + 407.2 + 416.3 = $1,652 Mil.
Total Current Assets was $2,070 Mil.
Total Assets was $4,494 Mil.
Property, Plant and Equipment(Net PPE) was $884 Mil.
Depreciation, Depletion and Amortization(DDA) was $197 Mil.
Selling, General & Admin. Expense(SGA) was $1,171 Mil.
Total Current Liabilities was $1,633 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)
=(999 / 6116.9) / (1087.6 / 6309.4)
=0.16331802 / 0.17237772
=0.9474

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)
=(417.6 / 6309.4) / (405.9 / 6116.9)
=0.26189495 / 0.27278523
=0.9601

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 - (1916 + 840.6) / 4248.9) / (1 - (2069.8 + 884.1) / 4493.5)
=0.35122032 / 0.34262824
=1.0251

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
=6116.9 / 6309.4
=0.9695

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))
=(197.4 / (197.4 + 884.1)) / (195.9 / (195.9 + 840.6))
=0.18252427 / 0.18900145
=0.9657

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)
=(1125 / 6116.9) / (1171 / 6309.4)
=0.18391669 / 0.18559609
=0.991

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)
=((968.5 + 1469.5) / 4248.9) / ((945.1 + 1632.9) / 4493.5)
=0.57379557 / 0.57371759
=1.0001

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
=(291 - -63.6 - 464.3) / 4248.9
=-0.0258

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 -2.69 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 1.03511.08170.83461.04711.11640.87111.10560.99790.91421.0682
GMI 0.97821.01011.0610.96561.0181.03730.96850.97711.02260.9457
AQI 0.95681.35251.04150.88440.96550.91120.97611.05331.03581.0189
SGI 1.01871.13131.06380.88710.97131.01091.00321.04721.0310.9426
DEPI 1.02731.02190.81750.95371.00540.88171.04170.98310.96971.0302
SGAI 1.00471.03381.03681.09660.95660.95611.00510.980.95041.0176
LVGI 0.95121.14021.0290.990.92520.95681.03970.99881.07361.0049
TATA -0.0234-0.0219-0.0393-0.2248-0.0295-0.0364-0.0449-0.0147-0.0131-0.0317
M-score -2.55-2.29-2.75-3.67-2.51-2.77-2.63-2.50-2.59-2.64

Avery Dennison Corp Quarterly Data

Sep13Dec13Mar14Jun14Sep14Dec14Mar15Jun15Sep15Dec15
DSRI 1.01830.99791.05041.05580.98630.91420.89270.91420.94741.0682
GMI 0.97130.97710.98841.00041.01381.02261.00020.98690.96010.9457
AQI 1.08421.05331.06251.05870.97961.03581.011.00841.02511.0189
SGI 1.0351.04721.04591.04571.04471.0311.01890.99260.96950.9426
DEPI 0.97090.98311.01991.0351.03360.96970.92990.95850.96571.0302
SGAI 0.98380.980.96750.96330.9590.94960.96780.97070.9911.0194
LVGI 0.95260.99880.98550.98331.07571.07361.09081.04081.00011.0049
TATA -0.0236-0.0147-0.0027-0.0011-0.0335-0.0132-0.0386-0.0463-0.0258-0.0319
M-score -2.51-2.50-2.37-2.35-2.62-2.59-2.77-2.80-2.69-2.64
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