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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.
During the past 13 years, the highest Beneish M-Score of Alkermes PLC was 0.52. The lowest was -4.25. And the median was -2.31.
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 Alkermes PLC 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 * 0.725||+||0.528 * 0.9362||+||0.404 * 0.7879||+||0.892 * 1.5901||+||0.115 * 0.9638|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.206||+||4.679 * -0.0724||-||0.327 * 0.9858|
|This Year (Mar15) TTM:||Last Year (Mar14) TTM:|
|Accounts Receivable was $142.0 Mil.|
Revenue was 161.214 + 175.161 + 159.992 + 153.424 = $649.8 Mil.
Gross Profit was 121.24 + 128.793 + 112.657 + 110.134 = $472.8 Mil.
Total Current Assets was $1,003.5 Mil.
Total Assets was $1,924.8 Mil.
Property, Plant and Equipment(Net PPE) was $268.8 Mil.
Depreciation, Depletion and Amortization(DDA) was $98.0 Mil.
Selling, General & Admin. Expense(SGA) was $220.4 Mil.
Total Current Liabilities was $114.2 Mil.
Long-Term Debt was $349.6 Mil.
Net Income was -30.657 + 30.514 + -39.956 + 3.735 = $-36.4 Mil.
Non Operating Income was -0.211 + 59.209 + -0.885 + 28.099 = $86.2 Mil.
Cash Flow from Operations was 2.077 + 13.643 + -7.809 + 8.777 = $16.7 Mil.
|Accounts Receivable was $123.2 Mil.
Revenue was 130.212 + 0 + 139.802 + 138.631 = $408.6 Mil.
Gross Profit was 91.373 + 0 + 94.379 + 92.64 = $278.4 Mil.
Total Current Assets was $776.8 Mil.
Total Assets was $1,835.5 Mil.
Property, Plant and Equipment(Net PPE) was $269.0 Mil.
Depreciation, Depletion and Amortization(DDA) was $93.3 Mil.
Selling, General & Admin. Expense(SGA) was $114.9 Mil.
Total Current Liabilities was $92.8 Mil.
Long-Term Debt was $356.0 Mil.
1. DSRI = Days Sales in Receivables Index
A large increase in DSR could be indicative of revenue inflation.
|DSRI||=||(Receivables_t / Revenue_t)||/||(Receivables_t-1 / Revenue_t-1)|
|=||(141.978 / 649.791)||/||(123.154 / 408.645)|
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.
|=||(GrossProfit_t-1 / Revenue_t-1)||/||(GrossProfit_t / Revenue_t)|
|=||(128.793 / 408.645)||/||(121.24 / 649.791)|
3. AQI = Asset Quality Index
AQI is the ratio of asset quality in year t to year t-1.
|AQI||=||(1 - (CurrentAssets_t + PPE_t) / TotalAssets_t)||/||(1 - (CurrentAssets_t-1 + PPE_t-1) / TotalAssets_t-1)|
|=||(1 - (1003.548 + 268.76) / 1924.774)||/||(1 - (776.771 + 268.992) / 1835.478)|
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.
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))|
|=||(93.318 / (93.318 + 268.992))||/||(98.021 / (98.021 + 268.76))|
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)|
|=||(220.405 / 649.791)||/||(114.937 / 408.645)|
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)|
|=||((349.638 + 114.217) / 1924.774)||/||((355.963 + 92.759) / 1835.478)|
8. TATA = Total Accruals to Total Assets
Total accruals calculated as the change in working capital accounts other than cash less depreciation.
|=||(NetIncome_t - NonOperatingIncome_t||-||CashFlowsfromOperations_t)||/||TotalAssets_t|
|=||(-36.364 - 86.212||-||16.688)||/||1924.774|
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.
Alkermes PLC has a M-score of -2.70 suggests that the company will not be a manipulator.
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
Alkermes PLC Annual Data
Alkermes PLC Quarterly Data