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Horizon Pharma PLC (NAS:HZNP)
Beneish M-Score
-0.33 (As of Today)

Warning Sign:

Beneish M-Score -0.33 higher than -2.22, which implies that it might have manipulated its financial results.

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.

Horizon Pharma PLC has a M-score of -0.33 signals that the company is a manipulator.

HZNP' s 10-Year Beneish M-Score Range
Min: -17.05   Max: 8.77
Current: -0.33

-17.05
8.77

During the past 7 years, the highest Beneish M-Score of Horizon Pharma PLC was 8.77. The lowest was -17.05. And the median was 0.56.


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 Horizon Pharma PLC 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 * 1.0389+0.528 * 1.1687+0.404 * 1.1568+0.892 * 3.0548+0.115 * 0.9114
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.7172+4.679 * 0.0069-0.327 * 0.8202
=-0.33

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.

This Year (Mar15) TTM:Last Year (Mar14) TTM:
Accounts Receivable was $127.3 Mil.
Revenue was 113.141 + 103.841 + 75.126 + 66.062 = $358.2 Mil.
Gross Profit was 84.288 + 71.161 + 61.482 + 41.252 = $258.2 Mil.
Total Current Assets was $735.9 Mil.
Total Assets was $1,527.3 Mil.
Property, Plant and Equipment(Net PPE) was $8.9 Mil.
Depreciation, Depletion and Amortization(DDA) was $46.9 Mil.
Selling, General & Admin. Expense(SGA) was $242.7 Mil.
Total Current Liabilities was $196.4 Mil.
Long-Term Debt was $566.9 Mil.
Net Income was -19.553 + -31.647 + 2.063 + -27.769 = $-76.9 Mil.
Non Operating Income was -12.372 + -33.229 + 16.176 + -15.582 = $-45.0 Mil.
Cash Flow from Operations was -70.739 + 10.079 + 1.466 + 16.761 = $-42.4 Mil.
Accounts Receivable was $40.1 Mil.
Revenue was 51.926 + 30.08 + 24.112 + 11.131 = $117.2 Mil.
Gross Profit was 44.307 + 24.825 + 20.905 + 8.737 = $98.8 Mil.
Total Current Assets was $162.7 Mil.
Total Assets was $299.1 Mil.
Property, Plant and Equipment(Net PPE) was $3.9 Mil.
Depreciation, Depletion and Amortization(DDA) was $12.8 Mil.
Selling, General & Admin. Expense(SGA) was $110.8 Mil.
Total Current Liabilities was $69.5 Mil.
Long-Term Debt was $112.8 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)
=(127.265 / 358.17) / (40.1 / 117.249)
=0.3553201 / 0.34200718
=1.0389

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)
=(71.161 / 117.249) / (84.288 / 358.17)
=0.84242936 / 0.72083927
=1.1687

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 - (735.925 + 8.873) / 1527.296) / (1 - (162.749 + 3.897) / 299.134)
=0.51234207 / 0.44290519
=1.1568

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
=358.17 / 117.249
=3.0548

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))
=(12.791 / (12.791 + 3.897)) / (46.941 / (46.941 + 8.873))
=0.76647891 / 0.84102555
=0.9114

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)
=(242.689 / 358.17) / (110.778 / 117.249)
=0.67758048 / 0.94480976
=0.7172

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)
=((566.914 + 196.438) / 1527.296) / ((112.774 + 69.501) / 299.134)
=0.49980619 / 0.6093423
=0.8202

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
=(-76.906 - -45.007 - -42.433) / 1527.296
=0.0069

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.

Horizon Pharma PLC has a M-score of -0.33 signals that the company is likely to 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 own currency.

Horizon Pharma PLC Annual Data

Dec08Dec09Dec10Dec11Dec12Dec13Dec14
DSRI 0.53671.17321.1545
GMI -0.13270.46091.092
AQI 0.5251.44551.292
SGI 2.72043.92784.012
DEPI 0.94350.84060.8627
SGAI 0.71810.340.5659
LVGI 0.96581.60320.7464
TATA -0.0597-0.0009-0.0474
M-score -2.390.080.44

Horizon Pharma PLC Quarterly Data

Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14Dec14Mar15
DSRI 0.53672.97553.71250.91741.17321.11831.32391.07271.15451.0389
GMI -0.13310.0460.31740.45570.46090.54270.7790.9731.0921.1687
AQI 0.5250.89090.88441.27211.44551.08430.89411.5521.2921.1568
SGI 2.72043.26683.17863.04033.92784.68735.334.47334.0123.0548
DEPI 0.94350.90510.78630.82820.84060.82860.84140.83810.86270.9114
SGAI 0.71820.47970.43880.42050.340.31890.31120.480.56590.7172
LVGI 0.96581.01720.96031.43331.60321.43031.30691.07260.74640.8202
TATA -0.0597-0.0394-0.0579-0.0735-0.0009-0.0083-0.0714-0.0372-0.04740.0069
M-score -2.390.701.37-1.320.080.631.190.770.44-0.33
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