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

Warning Sign:

Beneish M-Score 10.65 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 10.65 signals that the company is a manipulator.

ISIS' s 10-Year Beneish M-Score Range
Min: -4.67   Max: 10.65
Current: 10.65

-4.67
10.65

During the past 13 years, the highest Beneish M-Score of Isis Pharmaceuticals was 10.65. The lowest was -4.67. And the median was -2.41.


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 * 15.4896+0.528 * 1+0.404 * 0.7911+0.892 * 1.3378+0.115 * 1.2449
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.964+4.679 * -0.0951-0.327 * 1.0204
=10.65

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

This Year (Jun14) TTM:Last Year (Jun13) TTM:
Accounts Receivable was $41.9 Mil.
Revenue was 57.076 + 28.161 + 42.249 + 23.585 = $151.1 Mil.
Gross Profit was 57.076 + 28.161 + 42.249 + 23.585 = $151.1 Mil.
Total Current Assets was $705.8 Mil.
Total Assets was $817.8 Mil.
Property, Plant and Equipment(Net PPE) was $86.3 Mil.
Depreciation, Depletion and Amortization(DDA) was $12.0 Mil.
Selling, General & Admin. Expense(SGA) was $16.9 Mil.
Total Current Liabilities was $100.8 Mil.
Long-Term Debt was $229.7 Mil.
Net Income was -12.081 + -31.28 + -24.276 + -24.57 = $-92.2 Mil.
Non Operating Income was -0.26 + 0.397 + 0.305 + 0.175 = $0.6 Mil.
Cash Flow from Operations was -34.015 + -32.328 + -14.492 + 65.821 = $-15.0 Mil.
Accounts Receivable was $2.0 Mil.
Revenue was 38.092 + 43.36 + 19.873 + 11.601 = $112.9 Mil.
Gross Profit was 38.092 + 43.36 + 19.873 + 11.601 = $112.9 Mil.
Total Current Assets was $669.1 Mil.
Total Assets was $788.7 Mil.
Property, Plant and Equipment(Net PPE) was $88.3 Mil.
Depreciation, Depletion and Amortization(DDA) was $15.8 Mil.
Selling, General & Admin. Expense(SGA) was $13.1 Mil.
Total Current Liabilities was $87.0 Mil.
Long-Term Debt was $225.4 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)
=(41.941 / 151.071) / (2.024 / 112.926)
=0.27762443 / 0.01792324
=15.4896

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)
=(28.161 / 112.926) / (57.076 / 151.071)
=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 - (705.797 + 86.321) / 817.777) / (1 - (669.061 + 88.312) / 788.651)
=0.03137652 / 0.03966013
=0.7911

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
=151.071 / 112.926
=1.3378

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))
=(15.765 / (15.765 + 88.312)) / (11.958 / (11.958 + 86.321))
=0.15147439 / 0.12167401
=1.2449

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)
=(16.949 / 151.071) / (13.142 / 112.926)
=0.11219228 / 0.1163771
=0.964

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)
=((229.714 + 100.816) / 817.777) / ((225.391 + 86.995) / 788.651)
=0.40418109 / 0.3961017
=1.0204

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
=(-92.207 - 0.617 - -15.014) / 817.777
=-0.0951

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 10.65 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 0.86940.5631.061.03131.72740.96191.43291.8811.02941.0362
SGAI 1.10080.87493.83570.29690.57560.92640.90121.19980.95020.8259
LVGI 1.73780.73240.62731.40860.59520.36142.47321.29980.46410.743
TATA -0.1856-0.06830.0198-0.1831-0.39930.38810.00960.0606-0.1484-0.1493
M-score -0.41-3.26-2.90-1.04-4.140.80-3.702.39-3.829.78

Isis Pharmaceuticals Quarterly Data

Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14
DSRI 2.29920.22421.52020.07320.70381.42293.336914.73597.752415.4896
GMI 1111111111
AQI 0.9771.01651.06920.98410.95390.66990.54790.5260.54630.7911
SGI 1.01481.22451.23071.02991.20760.9131.09021.44331.08111.3378
DEPI 1.7770.84770.75831.02940.85260.73540.73790.84311.05671.2449
SGAI 1.05960.91490.89070.95020.84161.09970.9450.8261.13290.964
LVGI 1.22681.07350.95880.46410.89410.66640.66490.7430.74551.0204
TATA -0.0169-0.0333-0.0446-0.1484-0.1028-0.1167-0.198-0.1493-0.1602-0.0951
M-score -1.35-3.17-1.97-3.82-3.02-2.79-1.279.762.9410.65
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