Switch to:
Horizon Pharma PLC (NAS:HZNP)
Beneish M-Score
0.77 (As of Today)

Warning Sign:

Beneish M-Score 0.77 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 0.77 signals that the company is a manipulator.

HZNP' s 10-Year Beneish M-Score Range
Min: -17.05   Max: 8.77
Current: 0.77

-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 0.63.


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 * 1.0727+0.528 * 0.973+0.404 * 1.552+0.892 * 4.4733+0.115 * 0.8381
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.48+4.679 * -0.0372-0.327 * 1.0726
=0.77

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

This Year (Sep14) TTM:Last Year (Sep13) TTM:
Accounts Receivable was $80.0 Mil.
Revenue was 75.126 + 66.062 + 51.926 + 30.08 = $223.2 Mil.
Gross Profit was 61.482 + 41.252 + 44.307 + 24.825 = $171.9 Mil.
Total Current Assets was $360.8 Mil.
Total Assets was $1,124.9 Mil.
Property, Plant and Equipment(Net PPE) was $4.7 Mil.
Depreciation, Depletion and Amortization(DDA) was $21.1 Mil.
Selling, General & Admin. Expense(SGA) was $181.6 Mil.
Total Current Liabilities was $276.2 Mil.
Long-Term Debt was $297.0 Mil.
Net Income was 2.063 + -27.769 + -206.25 + -102.901 = $-334.9 Mil.
Non Operating Income was 16.176 + -15.582 + -204.735 + -95.165 = $-299.3 Mil.
Cash Flow from Operations was 1.466 + 16.761 + -0.757 + -11.178 = $6.3 Mil.
Accounts Receivable was $16.7 Mil.
Revenue was 24.112 + 11.131 + 8.693 + 5.959 = $49.9 Mil.
Gross Profit was 20.905 + 8.737 + 4.924 + 2.816 = $37.4 Mil.
Total Current Assets was $85.9 Mil.
Total Assets was $158.2 Mil.
Property, Plant and Equipment(Net PPE) was $3.5 Mil.
Depreciation, Depletion and Amortization(DDA) was $7.7 Mil.
Selling, General & Admin. Expense(SGA) was $84.6 Mil.
Total Current Liabilities was $45.5 Mil.
Long-Term Debt was $29.7 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)
=(80.022 / 223.194) / (16.677 / 49.895)
=0.35853114 / 0.33424191
=1.0727

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)
=(41.252 / 49.895) / (61.482 / 223.194)
=0.74921335 / 0.77002966
=0.973

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 - (360.767 + 4.656) / 1124.895) / (1 - (85.864 + 3.524) / 158.215)
=0.67514924 / 0.43502196
=1.552

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
=223.194 / 49.895
=4.4733

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))
=(7.728 / (7.728 + 3.524)) / (21.134 / (21.134 + 4.656))
=0.68681123 / 0.81946491
=0.8381

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)
=(181.602 / 223.194) / (84.576 / 49.895)
=0.8136509 / 1.69507967
=0.48

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)
=((297.022 + 276.154) / 1124.895) / ((29.672 + 45.485) / 158.215)
=0.50953733 / 0.47503081
=1.0726

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
=(-334.857 - -299.306 - 6.292) / 1124.895
=-0.0372

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 0.77 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

Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14Dec14
DSRI 2.97553.71250.91741.17321.11831.32391.07271.1545
GMI 0.0460.31740.45570.46090.54270.7790.9731.092
AQI 0.89090.88441.27211.44551.08430.89411.5521.292
SGI 3.26683.17863.04033.92784.68735.334.47334.012
DEPI 0.90510.78630.82820.84060.82860.84140.83810.8109
SGAI 0.47970.43880.42050.340.31890.31120.480.5659
LVGI 1.01720.96031.43331.60321.43031.30691.07260.7464
TATA -0.0394-0.0579-0.0735-0.0009-0.0083-0.0714-0.0372-0.0628
M-score 0.701.37-1.320.080.631.190.770.36
Get WordPress Plugins for easy affiliate links on Stock Tickers and Guru Names | Earn affiliate commissions by embedding GuruFocus Charts
GuruFocus Affiliate Program: Earn up to $400 per referral. ( Learn More)
FEEDBACK