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Merus Labs International Inc (NAS:MSLI)
Piotroski F-Score
3 (As of Today)

Warning Sign:

Piotroski F-Score of 3 is low, which usually implies poor business operation.

The zones of discrimination were as such:

Good or high score = 7, 8, 9
Bad or low score = 0, 1, 2, 3

Merus Labs International Inc has an F-score of 4 indicating the company's financial situation is typical for a stable company.

MSLI' s Piotroski F-Score Range Over the Past 10 Years
Min: 2   Max: 7
Current: 3

2
7

During the past 13 years, the highest Piotroski F-Score of Merus Labs International Inc was 7. The lowest was 2. And the median was 4.


Definition

How is the Piotroski F-Score calculated?

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

This Year (Jun16) TTM:Last Year (Jun15) TTM:
Net Income was 0.017337554651 + -0.667250054693 + -2.59035233631 + -3.91887699705 = $-7.16 Mil.
Cash Flow from Operations was 2.67375244987 + 5.01640778823 + 4.40949644639 + 1.20598728091 = $13.31 Mil.
Revenue was 12.1694557515 + 11.6137971268 + 14.897928323 + 19.8984023577 = $58.58 Mil.
Gross Profit was 9.13990652797 + 8.34317800627 + 10.507334039 + 13.0572359237 = $41.05 Mil.
Average Total Assets from the begining of this year (Jun15)
to the end of this year (Jun16) was
(199.484027497 + 198.992914217 + 188.376722818 + 294.042794496 + 286.247091671) / 5 = $233.42871014 Mil.
Total Assets at the begining of this year (Jun15) was $199.48 Mil.
Long-Term Debt was $91.53 Mil.
Total Current Assets was $28.85 Mil.
Total Current Liabilities was $36.10 Mil.
Net Income was -4.13132322223 + -0.187304890739 + 1.39800285307 + -1.46219167004 = $-4.38 Mil.

Revenue was 5.46635182999 + 9.21609434617 + 10.0491361547 + 7.68701981399 = $32.42 Mil.
Gross Profit was 4.61992552902 + 8.12348248352 + 8.90553178 + 7.0303275374 = $28.68 Mil.
Average Total Assets from the begining of last year (Jun14)
to the end of last year (Jun15) was
(122.051708218 + 179.995459086 + 167.94658342 + 149.269297828 + 199.484027497) / 5 = $163.74941521 Mil.
Total Assets at the begining of last year (Jun14) was $122.05 Mil.
Long-Term Debt was $41.35 Mil.
Total Current Assets was $42.00 Mil.
Total Current Liabilities was $16.44 Mil.

Profitability

Question 1. Return on Assets (ROA)

Net income before extraordinary items for the year divided by total assets at the beginning of the year.

Score 1 if positive, 0 if negative.

Merus Labs International Inc's current net income (TTM) was -7.16. ==> Negative ==> Score 0.

Question 2. Cash Flow Return on Assets (CFROA)

Net cash flow from operating activities (operating cash flow) divided by total assets at the beginning of the year.

Score 1 if positive, 0 if negative.

Merus Labs International Inc's current cash flow from operations (TTM) was 13.31. ==> Positive ==> Score 1.

Question 3. Change in Return on Assets

Compare this year’s return on assets (1) to last year’s return on assets.

Score 1 if it’s higher, 0 if it’s lower.

ROA (This Year)=Net Income (TTM)/Total Assets at the Beginning of This Year (Jun15)
=-7.1591418334/199.484027497
=-0.0358883

ROA (Last Year)=Net Income (TTM)/Total Assets at the Beginning of Last Year (Jun14)
=-4.38281692994/122.051708218
=-0.03590951

Merus Labs International Inc's return on assets of this year was -0.0358883. Merus Labs International Inc's return on assets of last year was -0.03590951. ==> This year is higher. ==> Score 1.

Question 4. Quality of Earnings (Accrual)

Compare Cash flow return on assets (2) to return on assets (1)

Score 1 if CFROA > ROA, 0 if CFROA <= ROA.

Merus Labs International Inc's current net income (TTM) was -7.16. Merus Labs International Inc's current cash flow from operations (TTM) was 13.31. ==> 13.31 > -7.16 ==> CFROA > ROA ==> Score 1.

Funding

Question 5. Change in Gearing or Leverage

Compare this year’s gearing (long-term debt divided by average total assets) to last year’s gearing.

Score 0 if this year's gearing is higher, 1 otherwise.

Gearing (This Year: Jun16)=Long-Term Debt/Average Total Assets from Jun15 to Jun16
=91.5309446254/233.42871014
=0.3921152

Gearing (Last Year: Jun15)=Long-Term Debt/Average Total Assets from Jun14 to Jun15
=41.3465426607/163.74941521
=0.25249887

Merus Labs International Inc's gearing of this year was 0.3921152. Merus Labs International Inc's gearing of last year was 0.25249887. ==> Last year is lower than this year ==> Score 0.

Question 6. Change in Working Capital (Liquidity)

Compare this year’s current ratio (current assets divided by current liabilities) to last year’s current ratio.

Score 1 if this year'’s current ratio is higher, 0 if it’s lower

Current Ratio (This Year: Jun16)=Total Current Assets/Total Current Liabilities
=28.8506281992/36.1036140841
=0.79910638

Current Ratio (Last Year: Jun15)=Total Current Assets/Total Current Liabilities
=42.0040436717/16.4391427416
=2.55512373

Merus Labs International Inc's current ratio of this year was 0.79910638. Merus Labs International Inc's current ratio of last year was 2.55512373. ==> Last year's current ratio is higher ==> Score 0.

Question 7. Change in Shares in Issue

Compare the number of shares in issue this year, to the number in issue last year.

Score 0 if there is larger number of shares in issue this year, 1 otherwise.

Merus Labs International Inc's number of shares in issue this year was 116.9. Merus Labs International Inc's number of shares in issue last year was 54. ==> There is larger number of shares in issue this year. ==> Score 0.

Efficiency

Question 8. Change in Gross Margin

Compare this year’s gross margin (gross profit divided by sales) to last year’s.

Score 1 if this year’s gross margin is higher, 0 if it’s lower.

Gross Margin (This Year: TTM)=Gross Profit/Revenue
=41.0476544969/58.579583559
=0.70071605

Gross Margin (Last Year: TTM)=Gross Profit/Revenue
=28.6792673299/32.4186021448
=0.88465466

Merus Labs International Inc's gross margin of this year was 0.70071605. Merus Labs International Inc's gross margin of last year was 0.88465466. ==> Last year's gross margin is higher ==> Score 0.

Question 9. Change in asset turnover

Compare this year’s asset turnover (total sales for the year divided by total assets at the beginning of the year) to last year’s asset turnover ratio.

Score 1 if this year’s asset turnover ratio is higher, 0 if it’s lower

Asset Turnover (This Year)=Revenue (TTM)/Total Assets at the Beginning of This Year (Jun15)
=58.579583559/199.484027497
=0.29365551

Asset Turnover (Last Year)=Revenue (TTM)/Total Assets at the Beginning of Last Year (Jun14)
=32.4186021448/122.051708218
=0.26561367

Merus Labs International Inc's asset turnover of this year was 0.29365551. Merus Labs International Inc's asset turnover of last year was 0.26561367. ==> This year's asset turnover is higher. ==> Score 1.

Evaluation

Piotroski F-Score= Que. 1+ Que. 2+ Que. 3+Que. 4+Que. 5+Que. 6+Que. 7+Que. 8+Que. 9
=0+1+1+1+0+0+0+0+1
=4

Good or high score = 7, 8, 9
Bad or low score = 0, 1, 2, 3

Merus Labs International Inc has an F-score of 4 indicating the company's financial situation is typical for a stable company.


Explanation

The developer of the system is Joseph D. Piotroski is relatively unknown accounting professor who shuns publicity and rarely gives interviews.

He graduated from the University of Illinois with a B.S. in accounting in 1989, received an M.B.A. from Indiana University in 1994. Five years later, in 1999, after earning a Ph.D. in accounting from the University of Michigan, he became an associate professor of accounting at the University of Chicago.

In 2000, he wrote a research paper called "Value Investing: The Use of Historical Financial Statement Information to Separate Winners from Losers" (pdf).

He wanted to see if he can develop a system (using a simple nine-point scoring system) that can increase the returns of a strategy of investing in low price to book (referred to in the paper as high book to market) value companies.

What he found was something that exceeded his most optimistic expectations.

Buying only those companies that scored highest (8 or 9) on his nine-point scale, or F-Score as he called it, over the 20 year period from 1976 to 1996 led to an average out-performance over the market of 13.4%.

Even more impressive were the results of a strategy of investing in the highest F-Score companies (8 or 9) and shorting companies with the lowest F-Score (0 or 1).

Over the same period from 1976 to 1996 (20 years) this strategy led to an average yearly return of 23%, substantially outperforming the average S&P 500 index return of 15.83% over the same period.


Related Terms

Net Income, Cash Flow from Operations, Revenue, Gross Profit, Total Assets, Long-Term Debt, Total Current Assets, Total Current Liabilities


Historical Data

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

Merus Labs International Inc Annual Data

Sep06Sep07Sep08Sep09Sep10Sep11Sep12Sep13Sep14Sep15
Question 1 1100000000
Question 2 1011001111
Question 3 0100100101
Question 4 1011011111
Question 5 1111110101
Question 6 1001010101
Question 7 1111110000
Question 8 0000000101
Question 9 0100101000
F-score 6545443626

Merus Labs International Inc Quarterly Data

Mar14Jun14Sep14Dec14Mar15Jun15Sep15Dec15Mar16Jun16
Question 1 0000000000
Question 2 1111111111
Question 3 1100101111
Question 4 1111111111
Question 5 1000001100
Question 6 1100001100
Question 7 0000010000
Question 8 0000111000
Question 9 0001100001
F-score 5423546534
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