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Affymax, Inc. (OTCPK:AFFY)
Beneish M-Score
-0.27 (As of Today)

Warning Sign:

Beneish M-Score 28.16 higher than -2.22, which implies that it might have manipulated its financial results.

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.

Affymax, Inc. has a M-score of 28.16 signals that the company is a manipulator.

AFFY' s 10-Year Beneish M-Score Range
Min: -13.5   Max: 7.65
Current: -0.27

-13.5
7.65

During the past 13 years, the highest Beneish M-Score of Affymax, Inc. was 7.65. The lowest was -13.50. And the median was -2.35.


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 Affymax, Inc. 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+0.528 * 1+0.404 * 1.3991+0.892 * 0.0145+0.115 * 0.4
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 5.4946+4.679 * 7.1082-0.327 * 1.4221
=28.16

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

This Year (Dec13) TTM:Last Year (Dec12) TTM:
Accounts Receivable was $0.00 Mil.
Revenue was 0 + 0 + 0.525 + 0.844 = $1.37 Mil.
Gross Profit was 0 + 0 + 0.525 + 0.844 = $1.37 Mil.
Total Current Assets was $6.32 Mil.
Total Assets was $7.44 Mil.
Property, Plant and Equipment(Net PPE) was $0.00 Mil.
Depreciation, Depletion and Amortization(DDA) was $0.72 Mil.
Selling, General & Admin. Expense(SGA) was $7.15 Mil.
Total Current Liabilities was $8.87 Mil.
Long-Term Debt was $0.00 Mil.
Net Income was -1.431 + -1.692 + 15.372 + -26.674 = $-14.43 Mil.
Non Operating Income was -0.002 + 0 + 0.01 + 0 = $0.01 Mil.
Cash Flow from Operations was -1.257 + -4.911 + -36.551 + -24.62 = $-67.34 Mil.
Accounts Receivable was $18.37 Mil.
Revenue was 14.799 + 13.607 + 2.755 + 63.209 = $94.37 Mil.
Gross Profit was 14.799 + 13.607 + 2.755 + 63.209 = $94.37 Mil.
Total Current Assets was $102.51 Mil.
Total Assets was $118.22 Mil.
Property, Plant and Equipment(Net PPE) was $2.98 Mil.
Depreciation, Depletion and Amortization(DDA) was $1.99 Mil.
Selling, General & Admin. Expense(SGA) was $89.71 Mil.
Total Current Liabilities was $99.08 Mil.
Long-Term Debt was $0.00 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)
=(0 / 1.369) / (18.365 / 94.37)
=0 / 0.19460634
=0

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)
=(0 / 94.37) / (0 / 1.369)
=1 / 1
=1

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 - (6.322 + 0) / 7.443) / (1 - (102.51 + 2.981) / 118.217)
=0.15061131 / 0.10764949
=1.3991

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
=1.369 / 94.37
=0.0145

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))
=(1.987 / (1.987 + 2.981)) / (0.722 / (0.722 + 0))
=0.39995974 / 1
=0.4

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)
=(7.151 / 1.369) / (89.714 / 94.37)
=5.22352082 / 0.95066229
=5.4946

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)
=((0 + 8.871) / 7.443) / ((0 + 99.075) / 118.217)
=1.19185812 / 0.83807743
=1.4221

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
=(-14.425 - 0.008 - -67.339) / 7.443
=7.1082

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.

Affymax, Inc. has a M-score of 28.16 signals that the company is likely to 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.

Affymax, Inc. Annual Data

Dec04Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13
DSRI 110.39790.850.5923011.33870
GMI 111111111
AQI 0.42081.55283.73231.71070.36022.93130.33141.53191.3991
SGI 0.4901158.45953.7811.86871.38680.97930.42411.97760.0145
DEPI 1.13411.53052.14470.76960.56250.78120.85021.05020.4
SGAI 4.15140.0070.57420.75770.77660.9272.32171.382321.1525
LVGI 1.20540.51935.09212.2561.13590.57320.47084.91191.4221
TATA -0.1289-0.46620.0107-0.13380.01940.26580.0889-0.47547.1083
M-score -4.37136.40-0.53-2.58-2.73-1.27-2.92-4.6525.47

Affymax, Inc. Quarterly Data

Sep11Dec11Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13
DSRI 3.4254110.50051.08631.33870.044000
GMI 1111111111
AQI 0.25940.33140.66080.6361.40371.53191.94795.54216.01431.3991
SGI 0.3660.42410.99671.52411.63951.97760.33960.35940.19420.0145
DEPI 0.81220.85020.90631.06221.0821.05020.54550.38410.39030.4
SGAI 2.5052.32171.25841.09341.34341.38235.71472.99732.39235.4946
LVGI 0.28290.47080.87231.67782.03414.91195.83692.77242.26591.4221
TATA 0.26310.08890.2935-0.1668-0.2045-0.4754-1.59970.12480.71977.1082
M-score 0.07-2.92-1.26-3.63-3.01-4.65-13.50-2.550.5528.16
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