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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 -4.17. And the median was -2.48.
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 * 0.8955||+||0.528 * 0.9979||+||0.404 * 0.6195||+||0.892 * 1.3693||+||0.115 * 1.3185|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9383||+||4.679 * -0.0236||-||0.327 * 0.96|
|This Year (Dec14) TTM:||Last Year (Dec13) TTM:|
|Accounts Receivable was $144.5 Mil.|
Revenue was 230.854 + 176.847 + 191.787 + 151.552 = $751.0 Mil.
Gross Profit was 185.036 + 146.927 + 160.577 + 128.736 = $621.3 Mil.
Total Current Assets was $1,425.6 Mil.
Total Assets was $2,490.5 Mil.
Property, Plant and Equipment(Net PPE) was $523.5 Mil.
Depreciation, Depletion and Amortization(DDA) was $56.7 Mil.
Selling, General & Admin. Expense(SGA) was $302.4 Mil.
Total Current Liabilities was $235.7 Mil.
Long-Term Debt was $658.0 Mil.
Net Income was -69.797 + 7.445 + -33.502 + -38.115 = $-134.0 Mil.
Non Operating Income was 0.572 + -0.299 + -1.36 + -0.491 = $-1.6 Mil.
Cash Flow from Operations was -26.777 + -8.356 + -11.532 + -26.874 = $-73.5 Mil.
|Accounts Receivable was $117.8 Mil.
Revenue was 146.873 + 136.874 + 136.81 + 127.928 = $548.5 Mil.
Gross Profit was 122.252 + 108.82 + 114.243 + 107.428 = $452.7 Mil.
Total Current Assets was $1,137.4 Mil.
Total Assets was $2,244.1 Mil.
Property, Plant and Equipment(Net PPE) was $319.3 Mil.
Depreciation, Depletion and Amortization(DDA) was $47.3 Mil.
Selling, General & Admin. Expense(SGA) was $235.4 Mil.
Total Current Liabilities was $183.3 Mil.
Long-Term Debt was $655.6 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)|
|=||(144.472 / 751.04)||/||(117.822 / 548.485)|
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)|
|=||(146.927 / 548.485)||/||(185.036 / 751.04)|
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 - (1425.629 + 523.516) / 2490.453)||/||(1 - (1137.418 + 319.316) / 2244.06)|
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))|
|=||(47.264 / (47.264 + 319.316))||/||(56.744 / (56.744 + 523.516))|
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)|
|=||(302.394 / 751.04)||/||(235.356 / 548.485)|
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)|
|=||((657.976 + 235.739) / 2490.453)||/||((655.566 + 183.271) / 2244.06)|
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|
|=||(-133.969 - -1.578||-||-73.539)||/||2490.453|
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 -2.45 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