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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 7.17. The lowest was -5.04. And the median was -2.11.
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 * 0.8919||+||0.528 * 1.0156||+||0.404 * 1.2222||+||0.892 * 1.1532||+||0.115 * 1.0476|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0728||+||4.679 * 0.0247||-||0.327 * 1.0536|
* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.
|This Year (Mar16) TTM:||Last Year (Mar15) TTM:|
|Accounts Receivable was $180.8 Mil.|
Revenue was 236.736 + 227.936 + 208.904 + 250.523 = $924.1 Mil.
Gross Profit was 193.618 + 185.338 + 172.185 + 210.645 = $761.8 Mil.
Total Current Assets was $992.8 Mil.
Total Assets was $3,667.0 Mil.
Property, Plant and Equipment(Net PPE) was $716.9 Mil.
Depreciation, Depletion and Amortization(DDA) was $56.6 Mil.
Selling, General & Admin. Expense(SGA) was $414.8 Mil.
Total Current Liabilities was $388.0 Mil.
Long-Term Debt was $668.0 Mil.
Net Income was -85.142 + 68.617 + -90.926 + -81.989 = $-189.4 Mil.
Non Operating Income was 0.063 + -7.722 + -7.631 + -9.325 = $-24.6 Mil.
Cash Flow from Operations was -171.553 + -68.037 + -2.85 + -12.991 = $-255.4 Mil.
|Accounts Receivable was $175.7 Mil.
Revenue was 202.92 + 230.068 + 176.549 + 191.787 = $801.3 Mil.
Gross Profit was 171.922 + 191.747 + 146.629 + 160.577 = $670.9 Mil.
Total Current Assets was $1,522.7 Mil.
Total Assets was $3,658.7 Mil.
Property, Plant and Equipment(Net PPE) was $538.1 Mil.
Depreciation, Depletion and Amortization(DDA) was $44.7 Mil.
Selling, General & Admin. Expense(SGA) was $335.3 Mil.
Total Current Liabilities was $305.5 Mil.
Long-Term Debt was $694.5 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)|
|=||(180.751 / 924.099)||/||(175.738 / 801.324)|
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)|
|=||(185.338 / 801.324)||/||(193.618 / 924.099)|
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 - (992.79 + 716.916) / 3666.993)||/||(1 - (1522.728 + 538.117) / 3658.686)|
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))|
|=||(44.684 / (44.684 + 538.117))||/||(56.614 / (56.614 + 716.916))|
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)|
|=||(414.765 / 924.099)||/||(335.267 / 801.324)|
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)|
|=||((668.009 + 388.011) / 3666.993)||/||((694.543 + 305.506) / 3658.686)|
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|
|=||(-189.44 - -24.615||-||-255.431)||/||3666.993|
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 -2.25 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