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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 -2.36.
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 * 0.6371||+||0.528 * 0.9359||+||0.404 * 0.9043||+||0.892 * 1.5297||+||0.115 * 0.9361|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.1889||+||4.679 * -0.0777||-||0.327 * 1.0249|
|This Year (Jun15) TTM:||Last Year (Jun14) TTM:|
|Accounts Receivable was $135.8 Mil.|
Revenue was 151.37 + 161.214 + 175.161 + 159.992 = $647.7 Mil.
Gross Profit was 120.952 + 121.24 + 128.793 + 112.657 = $483.6 Mil.
Total Current Assets was $1,017.0 Mil.
Total Assets was $1,914.7 Mil.
Property, Plant and Equipment(Net PPE) was $239.3 Mil.
Depreciation, Depletion and Amortization(DDA) was $93.7 Mil.
Selling, General & Admin. Expense(SGA) was $241.3 Mil.
Total Current Liabilities was $134.2 Mil.
Long-Term Debt was $348.1 Mil.
Net Income was -46.109 + -30.657 + 30.514 + -39.956 = $-86.2 Mil.
Non Operating Income was 11.996 + -0.211 + 59.209 + -0.885 = $70.1 Mil.
Cash Flow from Operations was -15.406 + 2.077 + 13.643 + -7.809 = $-7.5 Mil.
|Accounts Receivable was $139.3 Mil.
Revenue was 153.424 + 130.212 + 0 + 139.802 = $423.4 Mil.
Gross Profit was 110.134 + 91.373 + 0 + 94.379 = $295.9 Mil.
Total Current Assets was $886.9 Mil.
Total Assets was $1,857.6 Mil.
Property, Plant and Equipment(Net PPE) was $264.2 Mil.
Depreciation, Depletion and Amortization(DDA) was $94.5 Mil.
Selling, General & Admin. Expense(SGA) was $132.7 Mil.
Total Current Liabilities was $102.2 Mil.
Long-Term Debt was $354.4 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)|
|=||(135.782 / 647.737)||/||(139.316 / 423.438)|
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)|
|=||(121.24 / 423.438)||/||(120.952 / 647.737)|
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 - (1016.962 + 239.258) / 1914.676)||/||(1 - (886.919 + 264.247) / 1857.592)|
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))|
|=||(94.524 / (94.524 + 264.247))||/||(93.709 / (93.709 + 239.258))|
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)|
|=||(241.281 / 647.737)||/||(132.667 / 423.438)|
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)|
|=||((348.056 + 134.218) / 1914.676)||/||((354.382 + 102.16) / 1857.592)|
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|
|=||(-86.208 - 70.109||-||-7.495)||/||1914.676|
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 -2.83 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