Forest Laboratories (FRA:FQX) Beneish M-Score : -3.04 (As of May. 13, 2024)

View and export this data going back to . Start your Free Trial

What is Forest Laboratories Beneish M-Score?

The zones of discrimination for M-Score is as such:

An M-Score of equal or less than -1.78 suggests that the company is unlikely to be a manipulator.
An M-Score of greater than -1.78 signals that the company is likely to be a manipulator.

The historical rank and industry rank for Forest Laboratories's Beneish M-Score or its related term are showing as below:

FRA:FQX' s Beneish M-Score Range Over the Past 10 Years
Min: -4.96 Med: -2.43 Max: -1.85
Current: -3.04

During the past 13 years, the highest Beneish M-Score of Forest Laboratories was -1.85. The lowest was -4.96. And the median was -2.43.

Forest Laboratories Beneish M-Score Historical Data

The historical data trend for Forest Laboratories's Beneish M-Score can be seen below:

* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD.
* For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.

* Premium members only.

Forest Laboratories Beneish M-Score Chart

Forest Laboratories Annual Data

Trend

Mar05

Mar06

Mar07

Mar08

Mar09

Mar10

Mar11

Mar12

Mar13

Mar14

Beneish M-Score

Get a 7-Day Free Trial

-2.59

-2.40

-2.29

-2.46

-3.04

Forest Laboratories Quarterly Data
	Jun09	Sep09	Dec09	Mar10	Jun10	Sep10	Dec10	Mar11	Jun11	Sep11	Dec11	Mar12	Jun12	Sep12	Dec12	Mar13	Jun13	Sep13	Dec13	Mar14
Beneish M-Score	Get a 7-Day Free Trial															-2.46	-2.26	-2.57	-3.05	-3.04

Competitive Comparison of Forest Laboratories's Beneish M-Score

For the Drug Manufacturers - Specialty & Generic subindustry, Forest Laboratories's Beneish M-Score, along with its competitors' market caps and Beneish M-Score data, can be viewed below:

* Competitive companies are chosen from companies within the same industry, with headquarter located in same country, with closest market capitalization; x-axis shows the market cap, and y-axis shows the term value; the bigger the dot, the larger the market cap. Note that "N/A" values will not show up in the chart.

Forest Laboratories's Beneish M-Score Distribution in the Drug Manufacturers Industry

For the Drug Manufacturers industry and Healthcare sector, Forest Laboratories's Beneish M-Score distribution charts can be found below:

* The bar in red indicates where Forest Laboratories's Beneish M-Score falls into.

Forest Laboratories Beneish M-Score Calculation

The M-score was created by Professor Messod Beneish. Instead of measuring the bankruptcy risk (Altman Z-Score) or business trend (Piotroski 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 Forest Laboratories for today is based on a combination of the following eight different indices:

-4.84

0.92 * DSRI

0.528 * GMI

0.404 * AQI

0.892 * SGI

0.115 * DEPI

-4.84

0.92 * 1.0117

0.528 * 0.9989

0.404 * 1.1093

0.892 * 1.1171

0.115 * 0.615

0.172 * SGAI

4.679 * TATA

0.327 * LVGI

0.172 * 1.084

4.679 * -0.024583

0.327 * 2.8703

-3.11

This Year (Mar14) TTM:

Last Year (Mar13) TTM:

Total Receivables was €417 Mil.
Revenue was 789.717 + 641.229 + 639.731 + 631.365 = €2,702 Mil.
Gross Profit was 609.482 + 508.172 + 517.27 + 506.017 = €2,141 Mil.
Total Current Assets was €2,981 Mil.
Total Assets was €8,689 Mil.
Property, Plant and Equipment(Net PPE) was €269 Mil.
Depreciation, Depletion and Amortization(DDA) was €228 Mil.
Selling, General, & Admin. Expense(SGA) was €1,465 Mil.
Total Current Liabilities was €1,092 Mil.
Long-Term Debt & Capital Lease Obligation was €2,169 Mil.
Net Income was 39.103 + 13.112 + 52.35 + 17.645 = €122 Mil.
Non Operating Income was 0 + 0 + -5.835 + -3.156 = €-9 Mil.
Cash Flow from Operations was 101.242 + 148.142 + 116.788 + -21.373 = €345 Mil.

Total Receivables was €369 Mil.
Revenue was 628.274 + 545.806 + 590.254 + 654.438 = €2,419 Mil.
Gross Profit was 490.992 + 428.983 + 474.069 + 520.364 = €1,914 Mil.
Total Current Assets was €2,276 Mil.
Total Assets was €5,890 Mil.
Property, Plant and Equipment(Net PPE) was €291 Mil.
Depreciation, Depletion and Amortization(DDA) was €114 Mil.
Selling, General, & Admin. Expense(SGA) was €1,210 Mil.
Total Current Liabilities was €770 Mil.
Long-Term Debt & Capital Lease Obligation was €0 Mil.

1. DSRI = Days Sales in Receivables Index

Measured as the ratio of Revenue in Total 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)
	=	(417.065 / 2702.042)	/	(369.041 / 2418.772)
	=	0.154352	/	0.152574
	=	1.0117

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)
	=	(1914.408 / 2418.772)	/	(2140.941 / 2702.042)
	=	0.791479	/	0.792342
	=	0.9989

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 Property, Plant and Equipment to Total Assets.

AQI	=	(1 - (CurrentAssets_t + PPE_t) / TotalAssets_t)	/	(1 - (CurrentAssets_t-1 + PPE_t-1) / TotalAssets_t-1)
	=	(1 - (2981.444 + 268.822) / 8688.675)	/	(1 - (2275.691 + 291.013) / 5890.037)
	=	0.625919	/	0.56423
	=	1.1093

4. SGI = Sales Growth Index

Ratio of Revenue 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
	=	2702.042	/	2418.772
	=	1.1171

5. DEPI = Depreciation Index

Measured as the ratio of the rate of Depreciation, Depletion and Amortization 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))
	=	(114.343 / (114.343 + 291.013))	/	(227.738 / (227.738 + 268.822))
	=	0.28208	/	0.458631
	=	0.615

Note: If the Depreciation, Depletion and Amortization data is not available, we assume that the depreciation rate is constant and set the Depreciation Index to 1.

6. SGAI = Sales, General and Administrative expenses Index

The ratio of Selling, General, & Admin. Expense(SGA) to Sales 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)
	=	(1464.978 / 2702.042)	/	(1209.786 / 2418.772)
	=	0.542174	/	0.500165
	=	1.084

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 in leverage

LVGI	=	((LTD_t + CurrentLiabilities_t) / TotalAssets_t)	/	((LTD_t-1 + CurrentLiabilities_t-1) / TotalAssets_t-1)
	=	((2169 + 1092.214) / 8688.675)	/	((0 + 770.217) / 5890.037)
	=	0.375341	/	0.130766
	=	2.8703

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
	=	(122.21 - -8.991	-	344.799)	/	8688.675
	=	-0.024583

An M-Score of equal or less than -1.78 suggests that the company is unlikely to be a manipulator. An M-Score of greater than -1.78 signals that the company is likely to be a manipulator.

Forest Laboratories has a M-score of -3.11 suggests that the company is unlikely to be a manipulator.

Forest Laboratories Beneish M-Score Related Terms

Thank you for viewing the detailed overview of Forest Laboratories's Beneish M-Score provided by GuruFocus.com. Please click on the following links to see related term pages.

Forest Laboratories (FRA:FQX) Business Description

Industry

GURUFOCUS.COM » STOCK LIST » Healthcare » Drug Manufacturers » Forest Laboratories Inc (FRA:FQX) » Definitions » Beneish M-Score

Comparable Companies

Traded in Other Exchanges

N/A

Address

Website

http://www.frx.com

Forest Laboratories, Inc. is a Delaware corporation organized in 1956. The Company develops, manufactures and sells branded forms of ethical drug products most of which require a physician's prescription. The Company's most important United States products are marketed directly, or 'detailed,' to physicians by its salesforces. It emphasizes detailing to physicians of those branded ethical drugs which have the most potential for growth and benefit to patients. The Company also develops and introduces new products, including products developed in collaboration with licensing partners. The Company's products include those developed by it and those acquired from other pharmaceutical companies and integrated into its marketing and distribution systems. It actively promotes in the United States those branded products which have the most potential for growth and patient benefit, and which enable its salesforces to concentrate on groups of physicians who are high prescribers of its products. Such products include: Lexapro, its SSRI for the treatment of major depression in adults and adolescents and GAD in adults; Namenda, its NMDA antagonist for the treatment of moderate and severe Alzheimer's disease; Bystolic, its beta-blocker for the treatment of hypertension; and Savella, its newest product, an SNRI for the management of fibromyalgia. The Company's United Kingdom and Ireland subsidiaries sell both ethical products and over-the-counter preparations. Their most important products include Sudocrem, a topical preparation for the treatment of diaper rash; Colomycin, an antibiotic used in the treatment of cystic fibrosis; Infacol, used to treat infant colic; and Exorex, used in the treatment of eczema and psoriasis. The pharmaceutical industry is subject to comprehensive government regulation which substantially increases the difficulty and cost incurred in obtaining the approval to market newly proposed drug products and maintaining the approval to market existing drugs.

Forest Laboratories (FRA:FQX) Headlines

No Headlines