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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.
Alexion Pharmaceuticals, Inc. has a M-score of -2.56 suggests that the company is not a manipulator.
During the past 13 years, the highest Beneish M-Score of Alexion Pharmaceuticals, Inc. was 38.17. The lowest was -4.58. And the median was -2.56.
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 Alexion Pharmaceuticals, 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 * 1.043||+||0.528 * 1.0567||+||0.404 * 0.7691||+||0.892 * 1.3679||+||0.115 * 1.0095|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9307||+||4.679 * -0.0734||-||0.327 * 1.1612|
|This Year (Dec13) TTM:||Last Year (Dec12) TTM:|
|Accounts Receivable was $422 Mil.|
Revenue was 441.909 + 400.405 + 370.091 + 338.941 = $1,551 Mil.
Gross Profit was 390.357 + 349.047 + 330.714 + 303.672 = $1,374 Mil.
Total Current Assets was $2,187 Mil.
Total Assets was $3,318 Mil.
Property, Plant and Equipment(Net PPE) was $201 Mil.
Depreciation, Depletion and Amortization(DDA) was $29 Mil.
Selling, General & Admin. Expense(SGA) was $490 Mil.
Total Current Liabilities was $582 Mil.
Long-Term Debt was $97 Mil.
Net Income was -18.992 + 93.785 + 95.885 + 82.217 = $253 Mil.
Non Operating Income was -0.841 + -0.547 + -0.09 + 0.503 = $-1 Mil.
Cash Flow from Operations was 208.881 + 144.275 + 97.696 + 46.497 = $497 Mil.
|Accounts Receivable was $296 Mil.
Revenue was 320.526 + 294.136 + 274.719 + 244.733 = $1,134 Mil.
Gross Profit was 287.379 + 314.327 + 243.106 + 216.465 = $1,061 Mil.
Total Current Assets was $1,496 Mil.
Total Assets was $2,614 Mil.
Property, Plant and Equipment(Net PPE) was $166 Mil.
Depreciation, Depletion and Amortization(DDA) was $24 Mil.
Selling, General & Admin. Expense(SGA) was $385 Mil.
Total Current Liabilities was $360 Mil.
Long-Term Debt was $101 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)|
|=||(421.752 / 1551.346)||/||(295.598 / 1134.114)|
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)|
|=||(349.047 / 1134.114)||/||(390.357 / 1551.346)|
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 - (2186.857 + 201.109) / 3317.696)||/||(1 - (1495.6 + 165.629) / 2613.56)|
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))|
|=||(23.887 / (23.887 + 165.629))||/||(28.693 / (28.693 + 201.109))|
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)|
|=||(489.72 / 1551.346)||/||(384.678 / 1134.114)|
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)|
|=||((97.23 + 582.429) / 3317.696)||/||((101 + 360.089) / 2613.56)|
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|
|=||(252.895 - -0.975||-||497.349)||/||3317.696|
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.
Alexion Pharmaceuticals, Inc. has a M-score of -2.56 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
Alexion Pharmaceuticals, Inc. Annual Data
Alexion Pharmaceuticals, Inc. Quarterly Data