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GuruFocus has detected 4 Warning Signs with Alexion Pharmaceuticals Inc $ALXN.
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Alexion Pharmaceuticals Inc (NAS:ALXN)
Beneish M-Score
-2.47 (As of Today)

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 -2.47 suggests that the company is not a manipulator.

ALXN' s Beneish M-Score Range Over the Past 10 Years
Min: -5.1   Max: 38.17
Current: -2.47

-5.1
38.17

During the past 13 years, the highest Beneish M-Score of Alexion Pharmaceuticals Inc was 38.17. The lowest was -5.10. And the median was -2.35.


Definition

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 * 1.1194+0.528 * 0.9937+0.404 * 0.9613+0.892 * 1.1804+0.115 * 0.4368
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9854+4.679 * -0.039-0.327 * 0.977
=-2.47

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

This Year (Sep16) TTM:Last Year (Sep15) TTM:
Accounts Receivable was $677 Mil.
Revenue was 799.106 + 753.116 + 701.038 + 700.867 = $2,954 Mil.
Gross Profit was 728.011 + 692.489 + 642.052 + 643.241 = $2,706 Mil.
Total Current Assets was $2,595 Mil.
Total Assets was $13,293 Mil.
Property, Plant and Equipment(Net PPE) was $931 Mil.
Depreciation, Depletion and Amortization(DDA) was $389 Mil.
Selling, General & Admin. Expense(SGA) was $936 Mil.
Total Current Liabilities was $1,034 Mil.
Long-Term Debt was $3,154 Mil.
Net Income was 94.338 + 114.943 + 92.166 + 66.604 = $368 Mil.
Non Operating Income was 3.615 + -2.82 + 0.091 + -8.136 = $-7 Mil.
Cash Flow from Operations was 291.387 + 243.933 + 167.984 + 190.857 = $894 Mil.
Accounts Receivable was $512 Mil.
Revenue was 666.637 + 636.21 + 600.333 + 599.476 = $2,503 Mil.
Gross Profit was 612.58 + 584.203 + 530.934 + 550.037 = $2,278 Mil.
Total Current Assets was $2,480 Mil.
Total Assets was $13,153 Mil.
Property, Plant and Equipment(Net PPE) was $619 Mil.
Depreciation, Depletion and Amortization(DDA) was $91 Mil.
Selling, General & Admin. Expense(SGA) was $805 Mil.
Total Current Liabilities was $767 Mil.
Long-Term Debt was $3,475 Mil.



1. DSRI = Days Sales in Receivables Index

Measured as the ratio of days’ sales in receivables in year t to year t-1.

A large increase in DSR could be indicative of revenue inflation.

DSRI=(Receivables_t / Revenue_t) / (Receivables_t-1 / Revenue_t-1)
=(676.837 / 2954.127) / (512.253 / 2502.656)
=0.22911574 / 0.20468374
=1.1194

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.

GMI=GrossMargin_t-1 / GrossMargin_t
=(GrossProfit_t-1 / Revenue_t-1) / (GrossProfit_t / Revenue_t)
=(2277.754 / 2502.656) / (2705.793 / 2954.127)
=0.91013467 / 0.91593659
=0.9937

3. AQI = Asset Quality Index

AQI is the ratio of asset quality in year t to year t-1.

Asset quality is measured as the ratio of non-current assets other than plant, property and equipment to total assets.

AQI=(1 - (CurrentAssets_t + PPE_t) / TotalAssets_t) / (1 - (CurrentAssets_t-1 + PPE_t-1) / TotalAssets_t-1)
=(1 - (2594.534 + 931.06) / 13293.462) / (1 - (2480.219 + 618.733) / 13153.015)
=0.73478737 / 0.76439227
=0.9613

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.

SGI=Sales_t / Sales_t-1
=Revenue_t / Revenue_t-1
=2954.127 / 2502.656
=1.1804

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))
=(91.407 / (91.407 + 618.733)) / (389.017 / (389.017 + 931.06))
=0.12871687 / 0.29469266
=0.4368

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)
=(936.067 / 2954.127) / (804.795 / 2502.656)
=0.31686756 / 0.32157636
=0.9854

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)
=((3153.826 + 1034.341) / 13293.462) / ((3474.604 + 766.86) / 13153.015)
=0.31505465 / 0.32247086
=0.977

8. TATA = Total Accruals to Total Assets

Total accruals calculated as the change in working capital accounts other than cash less depreciation.

TATA=(IncomefromContinuingOperations_t - CashFlowsfromOperations_t) / TotalAssets_t
=(NetIncome_t - NonOperatingIncome_t - CashFlowsfromOperations_t) / TotalAssets_t
=(368.051 - -7.25 - 894.161) / 13293.462
=-0.039

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 -2.47 suggests that the company will not be a manipulator.


Related Terms

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


Historical Data

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

Alexion Pharmaceuticals Inc Annual Data

Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15
DSRI 0.75140.69120.44751.02291.06080.99970.83591.0430.71281.0558
GMI 11.10251.01861.00791.0030.99970.94161.05670.96031.0128
AQI 1.21050.4281.71522.48910.63621.02691.76690.76910.86093.1597
SGI 1.464346.23943.59651.49291.39851.44821.44761.36791.43991.1658
DEPI 2.79511.91740.87460.73270.79370.92380.76181.00951.16830.554
SGAI 1.97760.03790.38620.86660.93850.93840.86230.93070.89371.1741
LVGI 0.86831.13490.6810.25731.16111.1561.08021.16120.84031.836
TATA -0.06460.114-0.04140.2356-0.0607-0.0663-0.0591-0.07340.0045-0.0405
M-score -2.4338.17-0.37-0.08-2.56-2.43-2.26-2.56-2.32-1.95

Alexion Pharmaceuticals Inc Quarterly Data

Jun14Sep14Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16
DSRI 0.85450.74230.71280.87760.9770.97361.05581.02410.96361.1194
GMI 1.02770.9710.96030.99371.0021.00561.01280.98860.98780.9937
AQI 0.77270.82250.86090.93752.89642.96663.15973.05220.98690.9613
SGI 1.45161.45191.43991.27451.24451.20541.16581.19291.181.1804
DEPI 1.13491.281.16831.28531.33920.78360.5540.39130.28960.4368
SGAI 0.86630.85630.89371.05811.10271.14861.17411.10641.03790.9854
LVGI 1.01440.98820.84031.10722.25522.05331.8361.97850.95340.977
TATA -0.0074-0.02010.0045-0.0233-0.0175-0.0411-0.0401-0.0523-0.056-0.039
M-score -2.29-2.43-2.32-2.50-1.99-2.11-1.94-2.12-2.70-2.47
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