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Isis Pharmaceuticals (NAS:ISIS)
Beneish M-Score
-1.77 (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.

Isis Pharmaceuticals has a M-score of -1.77 signals that the company is a manipulator.

ISIS' s 10-Year Beneish M-Score Range
Min: -4.67   Max: 10.68
Current: -1.77

-4.67
10.68

During the past 13 years, the highest Beneish M-Score of Isis Pharmaceuticals was 10.68. The lowest was -4.67. And the median was -2.38.


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 * 1.5152+0.528 * 1+0.404 * 0.8711+0.892 * 1.3734+0.115 * 1.7854
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.972+4.679 * -0.0207-0.327 * 1.1412
=-1.77

* 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 $26.3 Mil.
Revenue was 44.063 + 57.076 + 28.161 + 42.249 = $171.5 Mil.
Gross Profit was 44.063 + 57.076 + 28.161 + 42.249 = $171.5 Mil.
Total Current Assets was $681.2 Mil.
Total Assets was $793.8 Mil.
Property, Plant and Equipment(Net PPE) was $88.1 Mil.
Depreciation, Depletion and Amortization(DDA) was $9.4 Mil.
Selling, General & Admin. Expense(SGA) was $18.0 Mil.
Total Current Liabilities was $107.3 Mil.
Long-Term Debt was $231.1 Mil.
Net Income was -26.676 + -12.081 + -31.28 + -24.276 = $-94.3 Mil.
Non Operating Income was 0.538 + -0.26 + 0.397 + 0.305 = $1.0 Mil.
Cash Flow from Operations was 1.944 + -34.015 + -32.328 + -14.492 = $-78.9 Mil.
Accounts Receivable was $12.6 Mil.
Revenue was 23.585 + 38.092 + 43.36 + 19.873 = $124.9 Mil.
Gross Profit was 23.585 + 38.092 + 43.36 + 19.873 = $124.9 Mil.
Total Current Assets was $763.3 Mil.
Total Assets was $881.9 Mil.
Property, Plant and Equipment(Net PPE) was $87.3 Mil.
Depreciation, Depletion and Amortization(DDA) was $18.2 Mil.
Selling, General & Admin. Expense(SGA) was $13.5 Mil.
Total Current Liabilities was $103.3 Mil.
Long-Term Debt was $226.2 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)
=(26.313 / 171.549) / (12.645 / 124.91)
=0.15338475 / 0.10123289
=1.5152

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)
=(57.076 / 124.91) / (44.063 / 171.549)
=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 - (681.163 + 88.068) / 793.803) / (1 - (763.304 + 87.273) / 881.916)
=0.03095478 / 0.03553513
=0.8711

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
=171.549 / 124.91
=1.3734

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))
=(18.172 / (18.172 + 87.273)) / (9.409 / (9.409 + 88.068))
=0.17233629 / 0.09652533
=1.7854

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)
=(17.989 / 171.549) / (13.476 / 124.91)
=0.10486217 / 0.10788568
=0.972

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)
=((231.092 + 107.325) / 793.803) / ((226.186 + 103.278) / 881.916)
=0.42632366 / 0.37357753
=1.1412

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
=(-94.313 - 0.98 - -78.891) / 793.803
=-0.0207

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 -1.77 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.

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

Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14
DSRI 0.22421.52020.07320.70381.42293.336914.73597.752415.48961.5152
GMI 1111111111
AQI 1.01651.06920.98410.95390.66990.54790.5260.54630.79110.8711
SGI 1.22451.23071.02991.20760.9131.09021.44331.08111.33781.3734
DEPI 0.84770.75831.02940.85260.73540.65511.03621.30621.54291.7854
SGAI 0.91490.89070.95020.84161.09970.9450.8261.13290.9640.972
LVGI 1.07350.95880.90140.89410.66640.66490.7430.74551.02041.1412
TATA -0.0394-0.0479-0.1484-0.1028-0.1167-0.198-0.1493-0.1602-0.0951-0.0207
M-score -3.20-1.99-3.96-3.02-2.79-1.289.782.9710.68-1.77
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