Switch to:
GuruFocus has detected 3 Warning Signs with Merus Labs International Inc $MSLI.
More than 500,000 people have already joined GuruFocus to track the stocks they follow and exchange investment ideas.
Merus Labs International Inc (NAS:MSLI)
Beneish M-Score
-1.88 (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.

Merus Labs International Inc has a M-score of -1.84 signals that the company is a manipulator.

MSLI' s Beneish M-Score Range Over the Past 10 Years
Min: -6.02   Max: 348.84
Current: -1.88

-6.02
348.84

During the past 13 years, the highest Beneish M-Score of Merus Labs International Inc was 348.84. The lowest was -6.02. And the median was -2.00.


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 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 * 1.4332+0.528 * 1.2012+0.404 * 1.1325+0.892 * 1.8562+0.115 * 1.0037
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0442+4.679 * -0.0913-0.327 * 1.7695
=-1.84

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

This Year (Dec16) TTM:Last Year (Dec15) TTM:
Accounts Receivable was $23.48 Mil.
Revenue was 19.5434440363 + 22.7265791883 + 19.8984023577 + 14.897928323 = $77.07 Mil.
Gross Profit was 13.4560311867 + 14.4675007629 + 13.0572359237 + 10.507334039 = $51.49 Mil.
Total Current Assets was $38.68 Mil.
Total Assets was $270.52 Mil.
Property, Plant and Equipment(Net PPE) was $0.23 Mil.
Depreciation, Depletion and Amortization(DDA) was $29.54 Mil.
Selling, General & Admin. Expense(SGA) was $19.27 Mil.
Total Current Liabilities was $46.36 Mil.
Long-Term Debt was $75.74 Mil.
Net Income was -4.73573731164 + -0.0503509307293 + -3.91887699705 + -2.59035233631 = $-11.30 Mil.
Non Operating Income was -0.305870005248 + -1.71116875191 + -0.515743756786 + 0.664600030243 = $-1.87 Mil.
Cash Flow from Operations was 3.68918209761 + 5.96505950565 + 1.20598728091 + 4.40949644639 = $15.27 Mil.
Accounts Receivable was $8.83 Mil.
Revenue was 11.6137971268 + 12.1694557515 + 7.68701981399 + 10.0491361547 = $41.52 Mil.
Gross Profit was 8.24327280683 + 9.13990652797 + 7.0303275374 + 8.90553178 = $33.32 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 $9.94 Mil.
Total Current Liabilities was $16.43 Mil.
Long-Term Debt was $31.62 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)
=(23.4770222655 / 77.0663539053) / (8.82520236272 / 41.5194088471)
=0.30463388 / 0.21255607
=1.4332

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)
=(33.3190386522 / 41.5194088471) / (51.4881019123 / 77.0663539053)
=0.80249309 / 0.66810092
=1.2012

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 - (38.6828098058 + 0.231651548092) / 270.516530475) / (1 - (45.8783635966 + 0.0845912637643) / 188.376722818)
=0.85614757 / 0.75600513
=1.1325

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
=77.0663539053 / 41.5194088471
=1.8562

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))
=(20.4351716716 / (20.4351716716 + 0.0845912637643)) / (29.5405778316 / (29.5405778316 + 0.231651548092))
=0.99587757 / 0.99221921
=1.0037

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)
=(19.2668369582 / 77.0663539053) / (9.9401770871 / 41.5194088471)
=0.25000322 / 0.23941037
=1.0442

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)
=((75.7403103681 + 46.3572981483) / 270.516530475) / ((31.6218187122 + 16.427477576) / 188.376722818)
=0.4513499 / 0.25507024
=1.7695

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
=(-11.2953175757 - -1.8681824837 - 15.2697253306) / 270.516530475
=-0.0913

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 -1.84 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 local exchange's currency.

Merus Labs International Inc Annual Data

Sep07Sep08Sep09Sep10Sep11Sep12Sep13Sep14Sep15Sep16
DSRI 0.62751.82136.2170.0029149.79310.47850.61421.92731.0767
GMI 111111.10330.9921.10320.97881.2604
AQI 1.60010.86180.3481.03451.576813.36590.94121.10290.85671.1523
SGI 1.97260.62250.05091.988708.78312.90040.86531.55391.8827
DEPI 0.82070.87331.32970.90080.55630.3270.99811.00890.99481.0039
SGAI 0.54221.82364.71370.376110.20940.47641.37280.63230.9756
LVGI 1.44831.06790.70071.66230.45114.44930.8050.84940.65921.6124
TATA 0.0416-0.4064-0.69230.0715-0.4748-0.2363-0.1534-0.0703-0.0697-0.0783
M-score -1.61-4.20-2.53-2.29-5.2352.23-1.86-3.20-1.35-1.99

Merus Labs International Inc Quarterly Data

Sep14Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16Dec16
DSRI 0.61521.21131.53841.98511.83760.93861.38291.70671.14711.4332
GMI 1.10381.05260.99880.93460.9761.05051.14391.26561.26791.2012
AQI 1.10291.07961.31281.62370.85670.86331.0681.1381.15231.1325
SGI 0.86381.00041.11941.18441.62971.51861.47831.8071.76721.8562
DEPI 1.00891.00671.00491.00450.99470.99660.99791.01031.00431.0037
SGAI 1.37291.0070.78260.73960.63290.79290.86150.80090.96521.0442
LVGI 0.84940.8721.13251.0580.65920.61821.11591.53931.61241.7695
TATA -0.0713-0.0494-0.0629-0.0611-0.061-0.0924-0.0681-0.0654-0.077-0.0913
M-score -3.21-2.42-2.05-1.45-1.33-2.37-1.93-1.36-2.01-1.84
Get WordPress Plugins for easy affiliate links on Stock Tickers and Guru Names | Earn affiliate commissions by embedding GuruFocus Charts
GuruFocus Affiliate Program: Earn up to $400 per referral. ( Learn More)
FEEDBACK