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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 Biomarin Pharmaceutical Inc was 3.79. The lowest was -4.43. 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 Biomarin Pharmaceutical 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 * 1.0398||+||0.528 * 1.0208||+||0.404 * 0.8635||+||0.892 * 1.255||+||0.115 * 0.5804|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.944||+||4.679 * -0.1011||-||0.327 * 0.9204|
|This Year (Dec16) TTM:||Last Year (Dec15) TTM:|
|Accounts Receivable was $215 Mil.|
Revenue was 300.091 + 279.896 + 300.131 + 236.736 = $1,117 Mil.
Gross Profit was 235.944 + 229.158 + 248.514 + 193.618 = $907 Mil.
Total Current Assets was $1,422 Mil.
Total Assets was $4,024 Mil.
Property, Plant and Equipment(Net PPE) was $799 Mil.
Depreciation, Depletion and Amortization(DDA) was $97 Mil.
Selling, General & Admin. Expense(SGA) was $477 Mil.
Total Current Liabilities was $439 Mil.
Long-Term Debt was $661 Mil.
Net Income was -78.711 + -42.797 + -423.56 + -85.142 = $-630 Mil.
Non Operating Income was 4.261 + 1.619 + -1.552 + 0.063 = $4 Mil.
Cash Flow from Operations was 0.353 + -10.617 + -46.02 + -171.553 = $-228 Mil.
|Accounts Receivable was $165 Mil.
Revenue was 227.936 + 208.904 + 250.135 + 202.92 = $890 Mil.
Gross Profit was 179.893 + 174 + 212.072 + 171.922 = $738 Mil.
Total Current Assets was $1,090 Mil.
Total Assets was $3,729 Mil.
Property, Plant and Equipment(Net PPE) was $704 Mil.
Depreciation, Depletion and Amortization(DDA) was $47 Mil.
Selling, General & Admin. Expense(SGA) was $402 Mil.
Total Current Liabilities was $445 Mil.
Long-Term Debt was $662 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)|
|=||(215.28 / 1116.854)||/||(164.959 / 889.895)|
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)|
|=||(737.887 / 889.895)||/||(907.234 / 1116.854)|
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 - (1421.791 + 798.768) / 4023.69)||/||(1 - (1089.639 + 704.207) / 3729.368)|
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))|
|=||(47.187 / (47.187 + 704.207))||/||(96.912 / (96.912 + 798.768))|
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)|
|=||(476.593 / 1116.854)||/||(402.271 / 889.895)|
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)|
|=||((660.761 + 439.31) / 4023.69)||/||((662.286 + 445.457) / 3729.368)|
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|
|=||(-630.21 - 4.391||-||-227.837)||/||4023.69|
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.
Biomarin Pharmaceutical Inc has a M-score of -2.75 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
Biomarin Pharmaceutical Inc Annual Data
Biomarin Pharmaceutical Inc Quarterly Data