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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 -5.36. 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 * 0.9146||+||0.528 * 1.013||+||0.404 * 1.418||+||0.892 * 1.3416||+||0.115 * 0.9928|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0537||+||4.679 * -0.0349||-||0.327 * 0.8252|
|This Year (Sep15) TTM:||Last Year (Sep14) TTM:|
|Accounts Receivable was $148.9 Mil.|
Revenue was 208.904 + 250.523 + 203.264 + 231.824 = $894.5 Mil.
Gross Profit was 172.185 + 210.645 + 170.451 + 186.006 = $739.3 Mil.
Total Current Assets was $1,175.6 Mil.
Total Assets was $3,624.9 Mil.
Property, Plant and Equipment(Net PPE) was $604.5 Mil.
Depreciation, Depletion and Amortization(DDA) was $62.1 Mil.
Selling, General & Admin. Expense(SGA) was $388.1 Mil.
Total Current Liabilities was $390.5 Mil.
Long-Term Debt was $667.8 Mil.
Net Income was -90.926 + -81.989 + -67.501 + -69.797 = $-310.2 Mil.
Non Operating Income was -7.631 + -9.325 + -7.026 + 20.877 = $-3.1 Mil.
Cash Flow from Operations was -2.85 + -12.991 + -137.811 + -27.024 = $-180.7 Mil.
|Accounts Receivable was $121.4 Mil.
Revenue was 176.549 + 191.787 + 151.552 + 146.873 = $666.8 Mil.
Gross Profit was 146.629 + 160.577 + 128.736 + 122.252 = $558.2 Mil.
Total Current Assets was $1,077.8 Mil.
Total Assets was $2,440.4 Mil.
Property, Plant and Equipment(Net PPE) was $486.7 Mil.
Depreciation, Depletion and Amortization(DDA) was $49.6 Mil.
Selling, General & Admin. Expense(SGA) was $274.6 Mil.
Total Current Liabilities was $206.6 Mil.
Long-Term Debt was $656.9 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)|
|=||(148.949 / 894.515)||/||(121.395 / 666.761)|
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)|
|=||(210.645 / 666.761)||/||(172.185 / 894.515)|
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 - (1175.589 + 604.513) / 3624.853)||/||(1 - (1077.819 + 486.741) / 2440.433)|
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))|
|=||(49.641 / (49.641 + 486.741))||/||(62.145 / (62.145 + 604.513))|
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)|
|=||(388.132 / 894.515)||/||(274.571 / 666.761)|
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)|
|=||((667.793 + 390.491) / 3624.853)||/||((656.884 + 206.55) / 2440.433)|
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|
|=||(-310.213 - -3.105||-||-180.676)||/||3624.853|
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 -2.19 signals that the company is likely to 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