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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 0.44. The lowest was -4.25. And the median was -2.44.
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 * 1.3218||+||0.528 * 0.9277||+||0.404 * 0.9735||+||0.892 * 1.0308||+||0.115 * 1.1051|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.4587||+||4.679 * -0.092||-||0.327 * 1.155|
|This Year (Jun16) TTM:||Last Year (Jun15) TTM:|
|Accounts Receivable was $185.0 Mil.|
Revenue was 195.165 + 156.774 + 163.098 + 152.653 = $667.7 Mil.
Gross Profit was 161.167 + 129.063 + 128.307 + 118.847 = $537.4 Mil.
Total Current Assets was $929.3 Mil.
Total Assets was $1,785.3 Mil.
Property, Plant and Equipment(Net PPE) was $258.4 Mil.
Depreciation, Depletion and Amortization(DDA) was $88.3 Mil.
Selling, General & Admin. Expense(SGA) was $362.8 Mil.
Total Current Liabilities was $236.3 Mil.
Long-Term Debt was $283.1 Mil.
Net Income was -47.193 + -77.423 + -69.382 + -81.015 = $-275.0 Mil.
Non Operating Income was 1.733 + 2.149 + -3.427 + 1.855 = $2.3 Mil.
Cash Flow from Operations was -28.878 + -57.214 + 2.415 + -29.446 = $-113.1 Mil.
|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.
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)|
|=||(185.008 / 667.69)||/||(135.782 / 647.737)|
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)|
|=||(483.642 / 647.737)||/||(537.384 / 667.69)|
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 - (929.254 + 258.354) / 1785.286)||/||(1 - (1016.962 + 239.258) / 1914.676)|
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))|
|=||(93.709 / (93.709 + 239.258))||/||(88.274 / (88.274 + 258.354))|
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)|
|=||(362.809 / 667.69)||/||(241.281 / 647.737)|
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)|
|=||((283.12 + 236.263) / 1785.286)||/||((348.056 + 134.218) / 1914.676)|
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|
|=||(-275.013 - 2.31||-||-113.123)||/||1785.286|
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 -2.75 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