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Horizon Pharma PLC (NAS:HZNP)
Beneish M-Score
-0.07 (As of Today)

Warning Sign:

Beneish M-Score -0.07 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 -0.07 signals that the company is a manipulator.

HZNP' s 10-Year Beneish M-Score Range
Min: -17.05   Max: 8.77
Current: -0.07

-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 0.50.


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 * 1.3076+0.528 * 1.0811+0.404 * 1.7926+0.892 * 2.7002+0.115 * 0.9076
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9215+4.679 * 0.036-0.327 * 0.7774
=-0.07

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

This Year (Jun15) TTM:Last Year (Jun14) TTM:
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.
Net Income was 31.814 + -19.553 + -31.647 + 2.063 = $-17.3 Mil.
Non Operating Income was -76.245 + -12.372 + -33.229 + 16.176 = $-105.7 Mil.
Cash Flow from Operations was 41.584 + -70.739 + 10.079 + 1.466 = $-17.6 Mil.
Accounts Receivable was $51.8 Mil.
Revenue was 66.062 + 51.926 + 30.08 + 24.112 = $172.2 Mil.
Gross Profit was 41.252 + 44.307 + 24.825 + 20.905 = $131.3 Mil.
Total Current Assets was $197.7 Mil.
Total Assets was $328.4 Mil.
Property, Plant and Equipment(Net PPE) was $4.0 Mil.
Depreciation, Depletion and Amortization(DDA) was $16.3 Mil.
Selling, General & Admin. Expense(SGA) was $133.9 Mil.
Total Current Liabilities was $204.4 Mil.
Long-Term Debt was $0.0 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)
=(182.868 / 464.929) / (51.792 / 172.18)
=0.39332457 / 0.30080149
=1.3076

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)
=(84.288 / 172.18) / (110.995 / 464.929)
=0.76251016 / 0.7053249
=1.0811

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 - (898.211 + 9.773) / 2942.687) / (1 - (197.675 + 4.031) / 328.364)
=0.69144391 / 0.38572438
=1.7926

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
=464.929 / 172.18
=2.7002

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))
=(16.291 / (16.291 + 4.031)) / (73.916 / (73.916 + 9.773))
=0.80164354 / 0.88322241
=0.9076

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)
=(333.128 / 464.929) / (133.877 / 172.18)
=0.7165137 / 0.77754095
=0.9215

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)
=((1132.898 + 290.899) / 2942.687) / ((0 + 204.371) / 328.364)
=0.48384249 / 0.62239161
=0.7774

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
=(-17.323 - -105.67 - -17.61) / 2942.687
=0.036

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 -0.07 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

Mar13Jun13Sep13Dec13Mar14Jun14Sep14Dec14Mar15Jun15
DSRI 2.97553.71250.91741.17321.11831.32391.07271.15451.03891.3076
GMI 0.0460.31740.45570.46090.54270.7790.9731.0921.16871.0811
AQI 0.89090.88441.27211.44551.08430.89411.5521.2921.15681.7926
SGI 3.26683.17863.04033.92784.68735.334.47334.0123.05482.7002
DEPI 0.90510.78630.82820.84060.82860.84140.83810.86270.91140.9076
SGAI 0.47970.43880.42050.340.31890.31120.480.56590.71720.9215
LVGI 1.01720.96031.43331.60321.43031.30691.07260.74640.82020.7774
TATA -0.0394-0.0579-0.0735-0.0009-0.0083-0.0714-0.0372-0.04740.00690.036
M-score 0.701.37-1.320.080.631.190.770.44-0.33-0.07
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