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Isis Pharmaceuticals (NAS:ISIS)
Beneish M-Score
2.97 (As of Today)

Warning Sign:

Beneish M-Score 2.97 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.

Isis Pharmaceuticals has a M-score of 2.97 signals that the company is a manipulator.

ISIS' s 10-Year Beneish M-Score Range
Min: -4.67   Max: 9.78
Current: 2.97

-4.67
9.78

During the past 13 years, the highest Beneish M-Score of Isis Pharmaceuticals was 9.78. The lowest was -4.67. And the median was -2.44.


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 Isis Pharmaceuticals 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 * 7.7524+0.528 * 1+0.404 * 0.5463+0.892 * 1.0811+0.115 * 1.3062
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.1329+4.679 * -0.1602-0.327 * 0.7455
=2.97

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

This Year (Mar14) TTM:Last Year (Mar13) TTM:
Accounts Receivable was $9.8 Mil.
Revenue was 28.161 + 42.249 + 23.585 + 38.092 = $132.1 Mil.
Gross Profit was 28.161 + 42.249 + 23.585 + 38.092 = $132.1 Mil.
Total Current Assets was $722.1 Mil.
Total Assets was $834.6 Mil.
Property, Plant and Equipment(Net PPE) was $86.6 Mil.
Depreciation, Depletion and Amortization(DDA) was $9.5 Mil.
Selling, General & Admin. Expense(SGA) was $15.9 Mil.
Total Current Liabilities was $100.8 Mil.
Long-Term Debt was $228.9 Mil.
Net Income was -31.28 + -24.276 + -24.57 + -10.126 = $-90.3 Mil.
Non Operating Income was 0.397 + 0.305 + 0.175 + 0.84 = $1.7 Mil.
Cash Flow from Operations was -32.328 + -14.492 + 65.821 + 22.74 = $41.7 Mil.
Accounts Receivable was $1.2 Mil.
Revenue was 43.36 + 19.873 + 11.601 + 47.34 = $122.2 Mil.
Gross Profit was 43.36 + 19.873 + 11.601 + 47.34 = $122.2 Mil.
Total Current Assets was $431.8 Mil.
Total Assets was $553.0 Mil.
Property, Plant and Equipment(Net PPE) was $89.7 Mil.
Depreciation, Depletion and Amortization(DDA) was $13.3 Mil.
Selling, General & Admin. Expense(SGA) was $13.0 Mil.
Total Current Liabilities was $70.3 Mil.
Long-Term Debt was $222.8 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)
=(9.823 / 132.087) / (1.172 / 122.174)
=0.07436765 / 0.00959288
=7.7524

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)
=(42.249 / 122.174) / (28.161 / 132.087)
=1 / 1
=1

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 - (722.053 + 86.641) / 834.616) / (1 - (431.829 + 89.694) / 552.961)
=0.03105859 / 0.05685392
=0.5463

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
=132.087 / 122.174
=1.0811

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))
=(13.316 / (13.316 + 89.694)) / (9.516 / (9.516 + 86.641))
=0.129269 / 0.09896315
=1.3062

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)
=(15.876 / 132.087) / (12.962 / 122.174)
=0.12019351 / 0.10609459
=1.1329

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)
=((228.923 + 100.836) / 834.616) / ((222.759 + 70.295) / 552.961)
=0.39510266 / 0.52997228
=0.7455

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
=(-90.252 - 1.717 - 41.741) / 834.616
=-0.1602

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.

Isis Pharmaceuticals has a M-score of 2.97 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.

Isis Pharmaceuticals Annual Data

Dec04Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13
DSRI 4.43520.41411.6510.65680.36312.33130.12776.10040.073214.736
GMI 1111111111
AQI 1.44181.18420.53831.03190.38980.76731.12011.00980.98410.526
SGI 0.85270.94160.37023.92651.83721.13440.8920.91351.02991.4433
DEPI 0.86940.5631.061.03131.72741.111.24171.8811.02941.0362
SGAI 1.10080.87493.83570.29690.57560.92640.90121.19980.95020.8259
LVGI 1.73780.73240.62731.40860.59520.72921.22580.66920.90140.743
TATA -0.1856-0.06830.0198-0.1831-0.39930.39780.00960.0547-0.1484-0.1493
M-score -0.41-3.26-2.90-1.04-4.140.75-3.312.57-3.969.78

Isis Pharmaceuticals Quarterly Data

Dec11Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14
DSRI 6.10042.29920.22421.52020.07320.70381.42293.336914.73597.7524
GMI 1111111111
AQI 1.00980.9771.01651.06920.98410.95390.66990.54790.5260.5463
SGI 0.91351.01481.22451.23071.02991.20760.9131.09021.44331.0811
DEPI 1.8811.7770.84770.75831.02940.85260.85010.85281.03621.3062
SGAI 1.19971.05960.91490.89070.95020.84161.09970.9450.8261.1329
LVGI 0.66921.22681.07350.95880.90140.89410.66640.66490.7430.7455
TATA 0.0546-0.023-0.0394-0.0479-0.1484-0.1028-0.1167-0.198-0.1493-0.1602
M-score 2.57-1.38-3.20-1.99-3.96-3.02-2.77-1.269.782.97
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