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Beneish M-Score -1.13 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.
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 -1.97.
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 * 1.7067||+||0.528 * 1.2625||+||0.404 * 1.138||+||0.892 * 1.807||+||0.115 * 1.0103|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.8103||+||4.679 * -0.0312||-||0.327 * 1.5393|
|This Year (Jun16) TTM:||Last Year (Jun15) TTM:|
|Accounts Receivable was $16.97 Mil.|
Revenue was 19.8984023577 + 14.897928323 + 11.6137971268 + 12.1694557515 = $58.58 Mil.
Gross Profit was 13.0572359237 + 10.507334039 + 8.34317800627 + 9.13990652797 = $41.05 Mil.
Total Current Assets was $28.85 Mil.
Total Assets was $286.25 Mil.
Property, Plant and Equipment(Net PPE) was $0.40 Mil.
Depreciation, Depletion and Amortization(DDA) was $25.79 Mil.
Selling, General & Admin. Expense(SGA) was $12.04 Mil.
Total Current Liabilities was $36.10 Mil.
Long-Term Debt was $91.53 Mil.
Net Income was -3.91887699705 + -2.59035233631 + -0.667250054693 + 0.017337554651 = $-7.16 Mil.
Non Operating Income was -0.515743756786 + 0.664600030243 + -1.48180558594 + -10.1929745213 = $-11.53 Mil.
Cash Flow from Operations was 1.20598728091 + 4.40949644639 + 5.01640778823 + 2.67375244987 = $13.31 Mil.
|Accounts Receivable was $5.50 Mil.
Revenue was 7.68701981399 + 10.0491361547 + 9.21609434617 + 5.46635182999 = $32.42 Mil.
Gross Profit was 7.0303275374 + 8.90553178 + 8.12348248352 + 4.61992552902 = $28.68 Mil.
Total Current Assets was $42.00 Mil.
Total Assets was $199.48 Mil.
Property, Plant and Equipment(Net PPE) was $0.09 Mil.
Depreciation, Depletion and Amortization(DDA) was $18.15 Mil.
Selling, General & Admin. Expense(SGA) was $8.22 Mil.
Total Current Liabilities was $16.44 Mil.
Long-Term Debt was $41.35 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)|
|=||(16.9722351481 / 58.579583559)||/||(5.50343712091 / 32.4186021448)|
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)|
|=||(28.6792673299 / 32.4186021448)||/||(41.0476544969 / 58.579583559)|
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 - (28.8506281992 + 0.400186133085) / 286.247091671)||/||(1 - (42.0040436717 + 0.0930044480388) / 199.484027497)|
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))|
|=||(18.1468424835 / (18.1468424835 + 0.0930044480388))||/||(25.7916830647 / (25.7916830647 + 0.400186133085))|
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)|
|=||(12.0390291883 / 58.579583559)||/||(8.22247881977 / 32.4186021448)|
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)|
|=||((91.5309446254 + 36.1036140841) / 286.247091671)||/||((41.3465426607 + 16.4391427416) / 199.484027497)|
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|
|=||(-7.1591418334 - -11.5259238338||-||13.3056439654)||/||286.247091671|
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 -1.20 signals that the company is likely to 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