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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.
During the past 13 years, the highest Beneish M-Score of Merus Labs International Inc was 348.84. The lowest was -6.35. And the median was -2.07.
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 Merus Labs International Inc 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 * 0.9385||+||0.528 * 1.0474||+||0.404 * 0.8633||+||0.892 * 1.5187||+||0.115 * 0.9966|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.804||+||4.679 * -0.109||-||0.327 * 0.6182|
|This Year (Dec15) TTM:||Last Year (Dec14) TTM:|
|Accounts Receivable was $8.83 Mil.|
Revenue was 11.6137971268 + 12.1694557515 + 7.68701981399 + 10.0491361547 = $41.52 Mil.
Gross Profit was 8.34317800627 + 9.13990652797 + 7.0303275374 + 8.90553178 = $33.42 Mil.
Total Current Assets was $45.88 Mil.
Total Assets was $188.38 Mil.
Property, Plant and Equipment(Net PPE) was $0.08 Mil.
Depreciation, Depletion and Amortization(DDA) was $20.44 Mil.
Selling, General & Admin. Expense(SGA) was $10.08 Mil.
Total Current Liabilities was $16.43 Mil.
Long-Term Debt was $31.62 Mil.
Net Income was -0.667250054693 + -0.437207899894 + -1.29882733522 + 1.71580282137 = $-0.69 Mil.
Non Operating Income was 0.0999051994458 + 1.15860093472 + 0 + 0 = $1.26 Mil.
Cash Flow from Operations was 5.01640778823 + 2.21920699533 + 4.68014557218 + 6.67855444603 = $18.59 Mil.
|Accounts Receivable was $6.19 Mil.
Revenue was 9.21609434617 + 5.46635182999 + 6.63434903047 + 6.02160216022 = $27.34 Mil.
Gross Profit was 8.12348248352 + 4.61992552902 + 5.37211449677 + 4.93159315932 = $23.05 Mil.
Total Current Assets was $20.77 Mil.
Total Assets was $167.95 Mil.
Property, Plant and Equipment(Net PPE) was $0.11 Mil.
Depreciation, Depletion and Amortization(DDA) was $14.25 Mil.
Selling, General & Admin. Expense(SGA) was $8.25 Mil.
Total Current Liabilities was $18.26 Mil.
Long-Term Debt was $51.04 Mil.
1. DSRI = Days Sales in Receivables Index
A large increase in DSR could be indicative of revenue inflation.
|DSRI||=||(Receivables_t / Revenue_t)||/||(Receivables_t-1 / Revenue_t-1)|
|=||(8.82520236272 / 41.5194088471)||/||(6.19146722164 / 27.3383973668)|
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.
|=||(GrossProfit_t-1 / Revenue_t-1)||/||(GrossProfit_t / Revenue_t)|
|=||(9.13990652797 / 27.3383973668)||/||(8.34317800627 / 41.5194088471)|
3. AQI = Asset Quality Index
AQI is the ratio of asset quality in year t to year t-1.
|AQI||=||(1 - (CurrentAssets_t + PPE_t) / TotalAssets_t)||/||(1 - (CurrentAssets_t-1 + PPE_t-1) / TotalAssets_t-1)|
|=||(1 - (45.8783635966 + 0.0845912637643) / 188.376722818)||/||(1 - (20.771765522 + 0.10752688172) / 167.94658342)|
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.
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))|
|=||(14.2476531803 / (14.2476531803 + 0.10752688172))||/||(20.4351716716 / (20.4351716716 + 0.0845912637643))|
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)|
|=||(10.0801902133 / 41.5194088471)||/||(8.25484697968 / 27.3383973668)|
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)|
|=||((31.6218187122 + 16.427477576) / 188.376722818)||/||((51.0379812695 + 18.262226847) / 167.94658342)|
8. TATA = Total Accruals to Total Assets
Total accruals calculated as the change in working capital accounts other than cash less depreciation.
|=||(NetIncome_t - NonOperatingIncome_t||-||CashFlowsfromOperations_t)||/||TotalAssets_t|
|=||(-0.687482468441 - 1.25850613417||-||18.5943148018)||/||188.376722818|
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.
Merus Labs International Inc has a M-score of -2.46 suggests that the company will not be a manipulator.
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
Merus Labs International Inc Annual Data
Merus Labs International Inc Quarterly Data