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Horizon Pharma PLC (NAS:HZNP)
Beneish M-Score
-2.11 (As of Today)

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 -2.11 signals that the company is a manipulator.

HZNP' s Beneish M-Score Range Over the Past 10 Years
Min: -17.05   Max: 8.77
Current: -2.11

-17.05
8.77

During the past 8 years, the highest Beneish M-Score of Horizon Pharma PLC was 8.77. The lowest was -17.05. And the median was 0.08.


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 * 0.8293+0.528 * 1.0189+0.404 * 1.0161+0.892 * 2.0071+0.115 * 0.9853
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.7586+4.679 * -0.0924-0.327 * 0.998
=-2.11

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

This Year (Jun16) TTM:Last Year (Jun15) TTM:
Accounts Receivable was $304.4 Mil.
Revenue was 257.378 + 204.69 + 244.538 + 226.544 = $933.2 Mil.
Gross Profit was 176.252 + 127.457 + 176.965 + 165.294 = $646.0 Mil.
Total Current Assets was $938.0 Mil.
Total Assets was $3,227.5 Mil.
Property, Plant and Equipment(Net PPE) was $22.0 Mil.
Depreciation, Depletion and Amortization(DDA) was $190.1 Mil.
Selling, General & Admin. Expense(SGA) was $507.2 Mil.
Total Current Liabilities was $418.8 Mil.
Long-Term Debt was $1,139.7 Mil.
Net Income was 14.984 + -45.406 + 23.994 + 3.277 = $-3.2 Mil.
Non Operating Income was -0.011 + -0.187 + -29.391 + -0.176 = $-29.8 Mil.
Cash Flow from Operations was 47.303 + 54.181 + 134.938 + 88.383 = $324.8 Mil.
Accounts Receivable was $182.9 Mil.
Revenue was 172.821 + 113.141 + 103.841 + 75.126 = $464.9 Mil.
Gross Profit was 110.995 + 84.288 + 71.161 + 61.482 = $327.9 Mil.
Total Current Assets was $898.2 Mil.
Total Assets was $2,942.7 Mil.
Property, Plant and Equipment(Net PPE) was $9.8 Mil.
Depreciation, Depletion and Amortization(DDA) was $73.9 Mil.
Selling, General & Admin. Expense(SGA) was $333.1 Mil.
Total Current Liabilities was $290.9 Mil.
Long-Term Debt was $1,132.9 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)
=(304.382 / 933.15) / (182.868 / 464.929)
=0.32618764 / 0.39332457
=0.8293

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)
=(327.926 / 464.929) / (645.968 / 933.15)
=0.7053249 / 0.69224455
=1.0189

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 - (938.044 + 21.971) / 3227.458) / (1 - (898.211 + 9.773) / 2942.687)
=0.70254764 / 0.69144391
=1.0161

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
=933.15 / 464.929
=2.0071

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))
=(73.916 / (73.916 + 9.773)) / (190.125 / (190.125 + 21.971))
=0.88322241 / 0.89641012
=0.9853

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)
=(507.23 / 933.15) / (333.128 / 464.929)
=0.54356749 / 0.7165137
=0.7586

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)
=((1139.687 + 418.809) / 3227.458) / ((1132.898 + 290.899) / 2942.687)
=0.48288653 / 0.48384249
=0.998

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
=(-3.151 - -29.765 - 324.805) / 3227.458
=-0.0924

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 -2.11 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

Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15
DSRI 1.4150.53671.17321.15451.1168
GMI 16.1805-0.13270.46091.0921.0348
AQI 0.76490.5251.44551.28470.9041
SGI 2.91542.72043.92784.0122.5494
DEPI 1.03750.94350.84060.86270.908
SGAI 0.50130.71810.340.56590.8255
LVGI 1.78360.96581.60320.75891.0556
TATA -0.6995-0.0444-0.0009-0.0483-0.0119
M-score 4.09-2.320.080.42-1.07

Horizon Pharma PLC Quarterly Data

Mar14Jun14Sep14Dec14Mar15Jun15Sep15Dec15Mar16Jun16
DSRI 1.11831.32391.07271.15451.03891.30761.00051.11680.96270.8293
GMI 0.54270.7790.9731.0921.16871.08111.09931.03481.05341.0189
AQI 1.08430.89411.5521.28471.15681.79261.0050.90411.40671.0161
SGI 4.68735.334.47334.0123.05482.70022.76152.54942.36922.0071
DEPI 0.82860.84140.83810.86270.91140.90760.89650.9080.93260.9853
SGAI 0.31890.31120.480.56590.71720.92150.73860.82550.88510.7586
LVGI 1.43031.30691.07260.75890.82020.77740.95451.05560.98560.998
TATA -0.0083-0.0714-0.0372-0.04830.00690.0360.0122-0.0119-0.0622-0.0924
M-score 0.631.190.770.42-0.33-0.07-0.75-1.07-1.37-2.11
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