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Merus Labs International Inc (NAS:MSLI)
Beneish M-Score
-3.31 (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 -3.37 suggests that the company is not a manipulator.

MSLI' s 10-Year Beneish M-Score Range
Min: -5.36   Max: 11.25
Current: -3.31

-5.36
11.25

During the past 13 years, the highest Beneish M-Score of Merus Labs International Inc was 11.25. The lowest was -5.36. And the median was -2.07.


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 * 0.6153+0.528 * 1.1038+0.404 * 1.1029+0.892 * 0.8636+0.115 * 1.0089
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.3729+4.679 * -0.1054-0.327 * 0.8494
=-3.37

* 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 $3.43 Mil.
Revenue was 5.46635182999 + 6.63434903047 + 6.02160216022 + 5.88063909774 = $24.00 Mil.
Gross Profit was 4.61992552902 + 5.37211449677 + 4.93159315932 + 4.95676691729 = $19.88 Mil.
Total Current Assets was $19.47 Mil.
Total Assets was $180.00 Mil.
Property, Plant and Equipment(Net PPE) was $0.12 Mil.
Depreciation, Depletion and Amortization(DDA) was $11.91 Mil.
Selling, General & Admin. Expense(SGA) was $8.78 Mil.
Total Current Liabilities was $18.63 Mil.
Long-Term Debt was $56.95 Mil.
Net Income was -4.13132322223 + -0.158818097876 + -1.3096309631 + -1.77255639098 = $-7.37 Mil.
Non Operating Income was -0.112614658069 + -0.000923361034164 + -0.004500450045 + -0.00187969924812 = $-0.12 Mil.
Cash Flow from Operations was 3.15502679139 + 2.92890120037 + 2.63906390639 + 2.99530075188 = $11.72 Mil.
Accounts Receivable was $6.46 Mil.
Revenue was 8.833655706 + 7.28709990301 + 5.3349609375 + 6.33939393939 = $27.80 Mil.
Gross Profit was 7.36943907157 + 6.85354025218 + 5.0791015625 + 6.10808080808 = $25.41 Mil.
Total Current Assets was $16.15 Mil.
Total Assets was $84.18 Mil.
Property, Plant and Equipment(Net PPE) was $0.01 Mil.
Depreciation, Depletion and Amortization(DDA) was $11.04 Mil.
Selling, General & Admin. Expense(SGA) was $7.40 Mil.
Total Current Liabilities was $12.65 Mil.
Long-Term Debt was $28.97 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)
=(3.43474707111 / 24.0029421184) / (6.46421663443 / 27.7951104859)
=0.14309692 / 0.23256668
=0.6153

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)
=(5.37211449677 / 27.7951104859) / (4.61992552902 / 24.0029421184)
=0.91419538 / 0.82824847
=1.1038

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 - (19.4714376533 + 0.117155571701) / 179.995459086) / (1 - (16.1518375242 + 0.0106382978723) / 84.1779497099)
=0.89117174 / 0.80799632
=1.1029

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
=24.0029421184 / 27.7951104859
=0.8636

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))
=(11.0392090958 / (11.0392090958 + 0.0106382978723)) / (11.9127814667 / (11.9127814667 + 0.117155571701))
=0.99903724 / 0.99026133
=1.0089

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)
=(8.77900140842 / 24.0029421184) / (7.40499532785 / 27.7951104859)
=0.36574689 / 0.2664136
=1.3729

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)
=((56.9539551358 + 18.6313686314) / 179.995459086) / ((28.9651837524 + 12.6489361702) / 84.1779497099)
=0.41992906 / 0.49435892
=0.8494

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
=(-7.37232867418 - -0.119918168396 - 11.71829265) / 179.995459086
=-0.1054

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 -3.37 suggests that the company will not 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.

Merus Labs International Inc Annual Data

Sep05Sep06Sep07Sep08Sep09Sep10Mar11Sep12Sep13Sep14
DSRI 0.91090.56570.62751.82133.81820.00470.23410.47850.6142
GMI 1111111.10330.9921.1032
AQI 1.58460.29821.60010.86180.3481.034513.82690.94121.1029
SGI 1.35080.52181.97190.62280.05091.989417.47872.90.8651
DEPI 0.71890.90820.82070.87331.32970.90080.29460.99811.0089
SGAI 0.90511.59550.54221.82364.71370.37610.07880.47641.3728
LVGI 0.92630.61321.44831.06790.70071.70547.39620.8050.8494
TATA 0.017-0.07160.0202-0.4064-0.69230.0715-0.2414-0.1534-0.1044
M-score -1.93-3.91-1.71-4.20-4.74-2.3013.61-1.86-3.36

Merus Labs International Inc Quarterly Data

Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14
DSRI 8.95637.4370.11260.64850.92220.46280.36410.35240.15330.6153
GMI 1.16341.10210.9080.91170.90.99251.05011.09931.15511.1038
AQI 5.44257.04441.20821.0211.19980.94120.93970.76870.61061.1029
SGI 6.195510.736750.23467.29854.27722.9981.7861.52121.19610.8636
DEPI 0.62860.62390.83490.97790.99080.99811.00020.99940.99961.0089
SGAI 0.39220.24150.05050.18650.31870.47630.72641.04531.18461.3729
LVGI 0.44887.8865.033517.062115.8860.8050.80830.59840.49320.8494
TATA 0.0197-0.2441-0.2502-0.3019-0.3733-0.1526-0.1941-0.1577-0.1221-0.1054
M-score 11.6911.3238.31-3.75-6.10-1.78-3.16-3.27-3.60-3.37
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