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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.
Merus Labs International Inc has a M-score of -3.22 suggests that the company is not a manipulator.
During the past 13 years, the highest Beneish M-Score of Merus Labs International Inc was 860.26. The lowest was -6.85. And the median was -2.04.
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 * 0.3378||+||0.528 * 1.0469||+||0.404 * 0.9397||+||0.892 * 1.7289||+||0.115 * 1.0002|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.727||+||4.679 * -0.1904||-||0.327 * 0.8083|
* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.
|This Year (Dec13) TTM:||Last Year (Dec12) TTM:|
|Accounts Receivable was $4.97 Mil.|
Revenue was 5.71937842779 + 7.95366795367 + 7.03653846154 + 5.73994111874 = $26.45 Mil.
Gross Profit was 4.82084095064 + 7.04054054054 + 6.23653846154 + 5.43768400393 = $23.54 Mil.
Total Current Assets was $14.98 Mil.
Total Assets was $79.37 Mil.
Property, Plant and Equipment(Net PPE) was $0.01 Mil.
Depreciation, Depletion and Amortization(DDA) was $10.80 Mil.
Selling, General & Admin. Expense(SGA) was $7.94 Mil.
Total Current Liabilities was $12.00 Mil.
Long-Term Debt was $25.56 Mil.
Net Income was -1.7239488117 + -0.0511583011583 + -1.00769230769 + -2.25613346418 = $-5.04 Mil.
Non Operating Income was -0.0018281535649 + -0.519305019305 + -0.763461538462 + -0.871442590775 = $-2.16 Mil.
Cash Flow from Operations was 2.91316270567 + 3.16023166023 + 2.34807692308 + 3.80667320903 = $12.23 Mil.
|Accounts Receivable was $8.51 Mil.
Revenue was 6.32661290323 + 3.88551165147 + 2.86489151874 + 2.22155085599 = $15.30 Mil.
Gross Profit was 6.09576612903 + 3.77912867275 + 2.45562130178 + 1.92044310171 = $14.25 Mil.
Total Current Assets was $12.57 Mil.
Total Assets was $91.89 Mil.
Property, Plant and Equipment(Net PPE) was $0.00 Mil.
Depreciation, Depletion and Amortization(DDA) was $6.62 Mil.
Selling, General & Admin. Expense(SGA) was $6.32 Mil.
Total Current Liabilities was $31.16 Mil.
Long-Term Debt was $22.64 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)|
|=||(4.9689213894 / 26.4495259617)||/||(8.50907258065 / 15.2985669294)|
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)|
|=||(7.04054054054 / 15.2985669294)||/||(4.82084095064 / 26.4495259617)|
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 - (14.9835466179 + 0.0091407678245) / 79.3692870201)||/||(1 - (12.5735887097 + 0.00403225806452) / 91.8881048387)|
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))|
|=||(6.62331723834 / (6.62331723834 + 0.00403225806452))||/||(10.8007136662 / (10.8007136662 + 0.0091407678245))|
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)|
|=||(7.94045303825 / 26.4495259617)||/||(6.31736156219 / 15.2985669294)|
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)|
|=||((25.5575868373 + 12) / 79.3692870201)||/||((22.6350806452 + 31.158266129) / 91.8881048387)|
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|
|=||(-5.03893288473 - -2.15603730211||-||12.228144498)||/||79.3692870201|
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 -3.22 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