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GuruFocus has detected 2 Warning Signs with Biomarin Pharmaceutical Inc $BMRN.
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Biomarin Pharmaceutical Inc (NAS:BMRN)
Beneish M-Score
-2.75 (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.

Biomarin Pharmaceutical Inc has a M-score of -2.75 suggests that the company is not a manipulator.

BMRN' s Beneish M-Score Range Over the Past 10 Years
Min: -4.43   Max: 3.79
Current: -2.75

-4.43
3.79

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.


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 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
=-2.75

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

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

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)
=(215.28 / 1116.854) / (164.959 / 889.895)
=0.19275572 / 0.18536906
=1.0398

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)
=(737.887 / 889.895) / (907.234 / 1116.854)
=0.82918434 / 0.81231208
=1.0208

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 - (1421.791 + 798.768) / 4023.69) / (1 - (1089.639 + 704.207) / 3729.368)
=0.44812871 / 0.51899464
=0.8635

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
=1116.854 / 889.895
=1.255

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))
=0.06279928 / 0.10819936
=0.5804

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)
=0.42672811 / 0.45204322
=0.944

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)
=0.27339855 / 0.29703237
=0.9204

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
=(-630.21 - 4.391 - -227.837) / 4023.69
=-0.1011

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.


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.

Biomarin Pharmaceutical Inc Annual Data

Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15Dec16
DSRI 0.80151.31161.23691.01581.03240.9170.98620.89760.96141.0398
GMI 1.05561.03171.03250.98011.00440.99150.97351.00241.00921.0208
AQI 0.72580.42035.6211.5571.02190.79361.01820.63812.3180.8635
SGI 1.44382.43861.0951.1591.1731.13451.09541.36611.18771.255
DEPI 10.7240.11331.29640.85750.9640.85491.33031.25811.28290.5804
SGAI 1.09530.56361.06511.05330.98570.99581.08420.93981.1210.944
LVGI 1.17681.0090.90670.58260.92740.9321.18370.94960.83680.9204
TATA -0.01450.0511-0.08870.1603-0.0521-0.0822-0.0446-0.02520.0155-0.1011
M-score -1.37-0.92-0.65-1.25-2.51-2.90-2.66-2.45-1.67-2.75

Biomarin Pharmaceutical Inc Quarterly Data

Sep14Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16Dec16
DSRI 0.77870.89681.13591.110.91710.96230.89231.01611.23761.0398
GMI 0.96321.00221.00511.00151.00921.00941.01811.02781.03161.0208
AQI 0.9360.63811.55531.83051.4182.3181.22220.79570.73940.8635
SGI 1.24971.36731.40061.37091.33791.18661.15271.13261.17121.255
DEPI 1.98271.25811.00961.06231.17061.28291.04760.75570.57060.5804
SGAI 1.00510.94010.97951.02721.05661.12061.07321.01250.98460.944
LVGI 2.33120.94960.78270.79350.82520.83681.05361.18310.91870.9204
TATA -0.02-0.02790.0017-0.009-0.03960.01550.0202-0.0785-0.0491-0.1011
M-score -2.92-2.47-1.69-1.68-2.20-1.67-2.27-2.87-2.45-2.75
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