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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 -2.33 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 -5.05. And the median was -2.40.
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 * 0.9145||+||0.528 * 1.0372||+||0.404 * 0.7496||+||0.892 * 1.4483||+||0.115 * 1.011|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.8671||+||4.679 * -0.0265||-||0.327 * 0.963|
|This Year (Mar14) TTM:||Last Year (Mar13) TTM:|
|Accounts Receivable was $429 Mil.|
Revenue was 566.616 + 441.909 + 400.405 + 370.091 = $1,779 Mil.
Gross Profit was 533.677 + 390.357 + 349.047 + 330.714 = $1,604 Mil.
Total Current Assets was $2,246 Mil.
Total Assets was $3,380 Mil.
Property, Plant and Equipment(Net PPE) was $218 Mil.
Depreciation, Depletion and Amortization(DDA) was $32 Mil.
Selling, General & Admin. Expense(SGA) was $510 Mil.
Total Current Liabilities was $397 Mil.
Long-Term Debt was $84 Mil.
Net Income was 159.354 + -18.992 + 93.785 + 95.885 = $330 Mil.
Non Operating Income was 1.258 + -0.841 + -0.547 + -0.09 = $-0 Mil.
Cash Flow from Operations was -31.055 + 208.881 + 144.275 + 97.696 = $420 Mil.
|Accounts Receivable was $324 Mil.
Revenue was 338.941 + 320.526 + 294.136 + 274.719 = $1,228 Mil.
Gross Profit was 303.672 + 287.379 + 314.327 + 243.106 = $1,148 Mil.
Total Current Assets was $1,550 Mil.
Total Assets was $2,686 Mil.
Property, Plant and Equipment(Net PPE) was $165 Mil.
Depreciation, Depletion and Amortization(DDA) was $24 Mil.
Selling, General & Admin. Expense(SGA) was $406 Mil.
Total Current Liabilities was $296 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)|
|=||(429.021 / 1779.021)||/||(323.907 / 1228.322)|
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)|
|=||(390.357 / 1228.322)||/||(533.677 / 1779.021)|
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 - (2245.88 + 218.086) / 3379.666)||/||(1 - (1550.041 + 164.966) / 2685.881)|
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))|
|=||(24.278 / (24.278 + 164.966))||/||(31.695 / (31.695 + 218.086))|
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)|
|=||(510.185 / 1779.021)||/||(406.262 / 1228.322)|
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)|
|=||((83.917 + 396.822) / 3379.666)||/||((101 + 295.747) / 2685.881)|
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|
|=||(330.032 - -0.22||-||419.797)||/||3379.666|
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 -2.33 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