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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 -3.37 suggests that the company is not a manipulator.
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.
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|
|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
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)|
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)|
|=||(5.37211449677 / 27.7951104859)||/||(4.61992552902 / 24.0029421184)|
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 - (19.4714376533 + 0.117155571701) / 179.995459086)||/||(1 - (16.1518375242 + 0.0106382978723) / 84.1779497099)|
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))|
|=||(11.0392090958 / (11.0392090958 + 0.0106382978723))||/||(11.9127814667 / (11.9127814667 + 0.117155571701))|
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)|
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)|
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|
|=||(-7.37232867418 - -0.119918168396||-||11.71829265)||/||179.995459086|
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.
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