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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 -2.31 suggests that the company is not a manipulator.
During the past 13 years, the highest Beneish M-Score of Alexion Pharmaceuticals Inc was 38.10. The lowest was -5.15. And the median was -2.37.
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 * 0.8545||+||0.528 * 0.9833||+||0.404 * 0.7727||+||0.892 * 1.4516||+||0.115 * 1.1349|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.8663||+||4.679 * -0.0074||-||0.327 * 1.0144|
|This Year (Jun14) TTM:||Last Year (Jun13) TTM:|
|Accounts Receivable was $441 Mil.|
Revenue was 512.495 + 566.616 + 441.909 + 400.405 = $1,921 Mil.
Gross Profit was 472.869 + 533.677 + 390.357 + 349.047 = $1,746 Mil.
Total Current Assets was $2,341 Mil.
Total Assets was $3,554 Mil.
Property, Plant and Equipment(Net PPE) was $273 Mil.
Depreciation, Depletion and Amortization(DDA) was $35 Mil.
Selling, General & Admin. Expense(SGA) was $546 Mil.
Total Current Liabilities was $418 Mil.
Long-Term Debt was $93 Mil.
Net Income was 166.495 + 159.354 + -18.992 + 93.785 = $401 Mil.
Non Operating Income was -1.202 + 1.258 + -0.841 + -0.547 = $-1 Mil.
Cash Flow from Operations was 106.15 + -31.055 + 208.881 + 144.275 = $428 Mil.
|Accounts Receivable was $355 Mil.
Revenue was 370.091 + 338.941 + 320.526 + 294.136 = $1,324 Mil.
Gross Profit was 330.714 + 303.672 + 287.379 + 260.95 = $1,183 Mil.
Total Current Assets was $1,679 Mil.
Total Assets was $2,815 Mil.
Property, Plant and Equipment(Net PPE) was $174 Mil.
Depreciation, Depletion and Amortization(DDA) was $25 Mil.
Selling, General & Admin. Expense(SGA) was $435 Mil.
Total Current Liabilities was $303 Mil.
Long-Term Debt was $96 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)|
|=||(440.699 / 1921.425)||/||(355.284 / 1323.694)|
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)|
|=||(533.677 / 1323.694)||/||(472.869 / 1921.425)|
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 - (2341.306 + 273.326) / 3553.81)||/||(1 - (1678.633 + 173.721) / 2815.238)|
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))|
|=||(25.482 / (25.482 + 173.721))||/||(34.721 / (34.721 + 273.326))|
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)|
|=||(546.473 / 1921.425)||/||(434.596 / 1323.694)|
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)|
|=||((93.015 + 417.701) / 3553.81)||/||((95.854 + 302.978) / 2815.238)|
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|
|=||(400.642 - -1.332||-||428.251)||/||3553.81|
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 -2.31 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