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Merus Labs International Inc (NAS:MSLI)
Beneish M-Score
-1.14 (As of Today)

Warning Sign:

Beneish M-Score -1.14 higher than -2.22, which implies that it might have manipulated its financial results.

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 -1.46 signals that the company is a manipulator.

MSLI' s Beneish M-Score Range Over the Past 10 Years
Min: -4.59   Max: 27.67
Current: -1.14

-4.59
27.67

During the past 13 years, the highest Beneish M-Score of Merus Labs International Inc was 27.67. The lowest was -4.59. And the median was -2.04.


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 * 1.8375+0.528 * 0.976+0.404 * 0.8567+0.892 * 1.6299+0.115 * 0.9947
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.6329+4.679 * -0.089-0.327 * 0.6592
=-1.46

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

This Year (Sep15) TTM:Last Year (Sep14) TTM:
Accounts Receivable was $10.29 Mil.
Revenue was 12.1694557515 + 7.68701981399 + 10.0491361547 + 9.21609434617 = $39.12 Mil.
Gross Profit was 9.13990652797 + 7.0303275374 + 8.90553178 + 8.12348248352 = $33.20 Mil.
Total Current Assets was $46.98 Mil.
Total Assets was $198.99 Mil.
Property, Plant and Equipment(Net PPE) was $0.09 Mil.
Depreciation, Depletion and Amortization(DDA) was $20.23 Mil.
Selling, General & Admin. Expense(SGA) was $9.06 Mil.
Total Current Liabilities was $19.46 Mil.
Long-Term Debt was $35.62 Mil.
Net Income was -0.437207899894 + -1.29882733522 + 1.71580282137 + -0.187304890739 = $-0.21 Mil.
Non Operating Income was 1.15860093472 + 0 + 0 + 0 = $1.16 Mil.
Cash Flow from Operations was 2.21920699533 + 4.68014557218 + 6.67855444603 + 2.76795005203 = $16.35 Mil.
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.



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)
=(10.2864465551 / 39.1217060664) / (3.43474707111 / 24.0029421184)
=0.26293451 / 0.14309692
=1.8375

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)
=(7.0303275374 / 24.0029421184) / (9.13990652797 / 39.1217060664)
=0.82824847 / 0.84861453
=0.976

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 - (46.9810040706 + 0.0897030001508) / 198.992914217) / (1 - (19.4714376533 + 0.117155571701) / 179.995459086)
=0.76345536 / 0.89117174
=0.8567

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
=39.1217060664 / 24.0029421184
=1.6299

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))
=(11.9127814667 / (11.9127814667 + 0.117155571701)) / (20.2320315294 / (20.2320315294 + 0.0897030001508))
=0.99026133 / 0.99558586
=0.9947

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)
=(9.05596765869 / 39.1217060664) / (8.77900140842 / 24.0029421184)
=0.23148192 / 0.36574689
=0.6329

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)
=((35.6158600935 + 19.464797226) / 198.992914217) / ((56.9539551358 + 18.6313686314) / 179.995459086)
=0.27679708 / 0.41992906
=0.6592

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
=(-0.207537304487 - 1.15860093472 - 16.3458570656) / 198.992914217
=-0.089

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 -1.46 signals that the company is likely to 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

Sep06Sep07Sep08Sep09Sep10Sep11Sep12Sep13Sep14Sep15
DSRI 0.56570.62751.82130.18162.17490.19310.41520.53860.61421.9273
GMI 1111111.12880.96961.10320.9788
AQI 0.29821.60010.86180.3481.03451.57688.47660.94121.10290.8567
SGI 0.52181.97190.62281.06970.8150.20225.67872.57640.86511.5539
DEPI 0.90820.82070.87330.80321.25630.66030.58770.99841.00890.9948
SGAI 1.59550.54221.82360.90070.84351.20180.37190.52091.37280.6323
LVGI 0.61321.44831.06790.70071.66230.45119.89960.80210.84940.6592
TATA -0.07160.0202-0.4064-0.6480.071-0.4007-0.0228-0.1534-0.1044-0.0838
M-score -3.91-1.71-4.20-6.37-1.38-5.4710.49-2.11-3.36-1.42

Merus Labs International Inc Quarterly Data

Jun13Sep13Dec13Mar14Jun14Sep14Dec14Mar15Jun15Sep15
DSRI 0.88730.44840.37840.37570.15930.63521.22011.52861.9851.8375
GMI 0.92091.0111.06111.11041.12891.08361.03550.98210.93460.976
AQI 1.19980.94120.93970.76870.61061.10291.07961.31281.62370.8567
SGI 4.44513.09491.71851.42681.15090.83650.99331.12691.18441.6299
DEPI 0.99070.99841.00030.99960.99981.00891.00671.00491.00440.9947
SGAI 0.33140.49490.74441.0421.14461.32750.97680.76490.73960.6329
LVGI 15.8860.80210.80830.59840.49320.84940.8721.13251.0580.6592
TATA -0.3761-0.1439-0.1936-0.1498-0.1233-0.1059-0.1027-0.1223-0.106-0.089
M-score -5.99-1.66-3.20-3.29-3.64-3.38-2.67-2.34-1.66-1.46
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