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Merus Labs International Inc (NAS:MSLI)
Beneish M-Score
-3.48 (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 -3.54 suggests that the company is not a manipulator.

MSLI' s 10-Year Beneish M-Score Range
Min: -6.92   Max: 348.84
Current: -3.48

-6.92
348.84

During the past 13 years, the highest Beneish M-Score of Merus Labs International Inc was 348.84. The lowest was -6.92. And the median was -2.13.


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 * 0.1616+0.528 * 1.1554+0.404 * 0.6106+0.892 * 1.1981+0.115 * 0.9996
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.184+4.679 * -0.111-0.327 * 0.4932
=-3.54

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.

This Year (Jun14) TTM:Last Year (Jun13) TTM:
Accounts Receivable was $2.36 Mil.
Revenue was 6.68994413408 + 6.08735213831 + 5.71937842779 + 8.8166023166 = $27.31 Mil.
Gross Profit was 5.41713221601 + 4.98544131028 + 4.82084095064 + 7.35521235521 = $22.58 Mil.
Total Current Assets was $63.26 Mil.
Total Assets was $123.07 Mil.
Property, Plant and Equipment(Net PPE) was $0.01 Mil.
Depreciation, Depletion and Amortization(DDA) was $11.26 Mil.
Selling, General & Admin. Expense(SGA) was $9.36 Mil.
Total Current Liabilities was $11.38 Mil.
Long-Term Debt was $22.31 Mil.
Net Income was -0.160148975791 + -1.32393084622 + -1.7239488117 + -0.0511583011583 = $-3.26 Mil.
Non Operating Income was -0.000931098696462 + -0.00454959053685 + -0.0018281535649 + -1.13996138996 = $-1.15 Mil.
Cash Flow from Operations was 2.95344506518 + 2.66787989081 + 2.91316270567 + 3.01158301158 = $11.55 Mil.
Accounts Receivable was $12.19 Mil.
Revenue was 7.22403846154 + 5.36113837095 + 6.32661290323 + 3.88551165147 = $22.80 Mil.
Gross Profit was 6.79423076923 + 5.1040235525 + 6.09576612903 + 3.77912867275 = $21.77 Mil.
Total Current Assets was $18.56 Mil.
Total Assets was $90.94 Mil.
Property, Plant and Equipment(Net PPE) was $0.01 Mil.
Depreciation, Depletion and Amortization(DDA) was $11.25 Mil.
Selling, General & Admin. Expense(SGA) was $6.60 Mil.
Total Current Liabilities was $37.74 Mil.
Long-Term Debt was $12.74 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)
=(2.36033519553 / 27.3132770168) / (12.1884615385 / 22.7973013872)
=0.08641714 / 0.53464493
=0.1616

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)
=(4.98544131028 / 22.7973013872) / (5.41713221601 / 27.3132770168)
=0.95507572 / 0.8266539
=1.1554

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 - (63.2625698324 + 0.00744878957169) / 123.074487896) / (1 - (18.5576923077 + 0.0115384615385) / 90.9355769231)
=0.48592093 / 0.79579796
=0.6106

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
=27.3132770168 / 22.7973013872
=1.1981

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))
=(11.2507030527 / (11.2507030527 + 0.0115384615385)) / (11.2574928233 / (11.2574928233 + 0.00744878957169))
=0.99897547 / 0.99933876
=0.9996

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)
=(9.36136141325 / 27.3132770168) / (6.59954789295 / 22.7973013872)
=0.34274032 / 0.28948812
=1.184

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)
=((22.3137802607 + 11.3836126629) / 123.074487896) / ((12.7394230769 + 37.7442307692) / 90.9355769231)
=0.27379673 / 0.55515845
=0.4932

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
=(-3.25918693487 - -1.14727023276 - 11.5460706732) / 123.074487896
=-0.111

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 -3.54 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

Sep04Sep05Sep06Sep07Sep08Sep09Sep10Sep11Sep12Sep13
DSRI 2.59030.91090.56570.62751.82133.81820.0047149.79310.4785
GMI 111111111.10330.992
AQI 0.7811.58460.29821.60010.86180.3481.03451.576813.36590.9412
SGI 0.44491.30890.51532.10120.52790.05851.968308.57932.9211
DEPI 1.59390.71890.90820.82070.87331.32970.90080.55630.3270.9981
SGAI 1.21380.90511.59550.54221.82364.71370.376110.20940.4764
LVGI 0.20.92630.61321.44831.06790.70071.70540.43974.33690.805
TATA 0.00030.017-0.07160.0202-0.4064-0.69230.07150.0927-0.2414-0.1394
M-score -1.31-1.96-3.92-1.59-4.28-4.73-2.32-2.5752.06-1.77

Merus Labs International Inc Quarterly Data

Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14
DSRI 4.53826.16670.59810.99561.18771.27280.46780.35750.38330.1616
GMI 1.14531.1530.97540.94490.92340.90810.9921.04941.09921.1554
AQI 6.73755.44250.99571.20821.0211.19980.94120.93970.76870.6106
SGI 5.64758.91713.83645.61023.7262.91772.9881.77281.51031.1981
DEPI 0.62640.62431.00290.98570.99230.99520.99811.00020.99940.9996
SGAI 0.38050.23190.54770.46930.35190.53770.47620.72491.04521.184
LVGI 0.45250.44881.04065.033517.062115.8860.8050.80830.59840.4932
TATA -0.07330.0184-0.2435-0.2476-0.2974-0.374-0.1387-0.1829-0.1428-0.111
M-score 7.2211.57-1.41-0.70-6.44-7.02-1.72-3.13-3.18-3.54
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