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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 -4.05. 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 *||+||0.528 *||+||0.404 *||+||0.892 *||+||0.115 *|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 *||+||4.679 *||-||0.327 *|
|This Year (Dec14) TTM:||Last Year (Dec13) TTM:|
|Accounts Receivable was $151.6 Mil.|
Revenue was 175.161 + 159.992 + 153.424 + 130.212 = $618.8 Mil.
Gross Profit was 128.793 + 112.657 + 110.134 + 91.373 = $443.0 Mil.
Total Current Assets was $876.8 Mil.
Total Assets was $1,921.3 Mil.
Property, Plant and Equipment(Net PPE) was $265.7 Mil.
Depreciation, Depletion and Amortization(DDA) was $98.1 Mil.
Selling, General & Admin. Expense(SGA) was $199.9 Mil.
Total Current Liabilities was $130.6 Mil.
Long-Term Debt was $351.2 Mil.
Net Income was 30.514 + -39.956 + 3.735 + -24.354 = $-30.1 Mil.
Non Operating Income was 59.209 + -0.885 + 28.099 + -1.85 = $84.6 Mil.
Cash Flow from Operations was 13.643 + -7.809 + 8.777 + -3.472 = $11.1 Mil.
|Accounts Receivable was $0.0 Mil.
Revenue was 0 + 139.802 + 138.631 + 163.422 = $441.9 Mil.
Gross Profit was 0 + 94.379 + 92.64 + 115.431 = $302.5 Mil.
Total Current Assets was $0.0 Mil.
Total Assets was $0.0 Mil.
Property, Plant and Equipment(Net PPE) was $0.0 Mil.
Depreciation, Depletion and Amortization(DDA) was $89.1 Mil.
Selling, General & Admin. Expense(SGA) was $107.1 Mil.
Total Current Liabilities was $0.0 Mil.
Long-Term Debt was $0.0 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)|
|=||(151.551 / 618.789)||/||(0 / 441.855)|
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)|
|=||(112.657 / 441.855)||/||(128.793 / 618.789)|
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 - (876.793 + 265.74) / 1921.272)||/||(1 - (0 + 0) / 0)|
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))|
|=||(89.086 / (89.086 + 0))||/||(98.087 / (98.087 + 265.74))|
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)|
|=||(199.905 / 618.789)||/||(107.066 / 441.855)|
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)|
|=||((351.22 + 130.582) / 1921.272)||/||((0 + 0) / 0)|
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|
|=||(-30.061 - 84.573||-||11.139)||/||1921.272|
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 signals that the company is likely to 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