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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.
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 -2.19.
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 * 1.985||+||0.528 * 0.9346||+||0.404 * 1.6237||+||0.892 * 1.1844||+||0.115 * 1.0045|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.7396||+||4.679 * -0.1056||-||0.327 * 1.058|
|This Year (Jun15) TTM:||Last Year (Jun14) TTM:|
|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.
Net Income was -1.29882733522 + 1.71580282137 + -0.187304890739 + -4.13132322223 = $-3.90 Mil.
Non Operating Income was 0 + 0 + 0 + -0.112614658069 = $-0.11 Mil.
Cash Flow from Operations was 4.68014557218 + 6.67855444603 + 2.76795005203 + 3.15502679139 = $17.28 Mil.
|Accounts Receivable was $2.34 Mil.
Revenue was 6.63434903047 + 6.02160216022 + 5.88063909774 + 8.833655706 = $27.37 Mil.
Gross Profit was 5.37211449677 + 4.93159315932 + 4.95676691729 + 7.36943907157 = $22.63 Mil.
Total Current Assets was $62.74 Mil.
Total Assets was $122.05 Mil.
Property, Plant and Equipment(Net PPE) was $0.01 Mil.
Depreciation, Depletion and Amortization(DDA) was $11.29 Mil.
Selling, General & Admin. Expense(SGA) was $9.39 Mil.
Total Current Liabilities was $11.29 Mil.
Long-Term Debt was $22.13 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)|
|=||(5.50343712091 / 32.4186021448)||/||(2.34072022161 / 27.3702459944)|
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)|
|=||(8.90553178 / 27.3702459944)||/||(7.0303275374 / 32.4186021448)|
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 - (42.0040436717 + 0.0930044480388) / 199.484027497)||/||(1 - (62.7368421053 + 0.00738688827331) / 122.051708218)|
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))|
|=||(11.2862262037 / (11.2862262037 + 0.00738688827331))||/||(18.1468424835 / (18.1468424835 + 0.0930044480388))|
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)|
|=||(8.22247881977 / 32.4186021448)||/||(9.38585103848 / 27.3702459944)|
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)|
|=||((41.3465426607 + 16.4391427416) / 199.484027497)||/||((22.1283471837 + 11.2890120037) / 122.051708218)|
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|
|=||(-3.90165262683 - -0.112614658069||-||17.2816768616)||/||199.484027497|
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 -1.66 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