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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 -3.63 suggests that the company is not a manipulator.

MSLI' s 10-Year Beneish M-Score Range
Min: -6.76   Max: 354.66
Current: -3.31

-6.76
354.66

During the past 13 years, the highest Beneish M-Score of Merus Labs International Inc was 354.66. The lowest was -6.76. And the median was -2.27.


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 * 0.1685+0.528 * 1.1368+0.404 * 0.6106+0.892 * 1.1065+0.115 * 0.9997
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.2143+4.679 * -0.111-0.327 * 0.4932
=-3.63

* 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 $12.66 Mil.
Revenue was 7.22403846154 + 5.36113837095 + 7.03528225806 + 5.06382978723 = $24.68 Mil.
Gross Profit was 6.79423076923 + 5.1040235525 + 6.66733870968 + 4.63120567376 = $23.20 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 $11.94 Mil.
Selling, General & Admin. Expense(SGA) was $6.97 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) / (12.6586538462 / 24.6842888778)
=0.08641714 / 0.5128223
=0.1685

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 / 24.6842888778) / (5.41713221601 / 27.3132770168)
=0.9397394 / 0.8266539
=1.1368

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 / 24.6842888778
=1.1065

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))
=(11.9355577771 / (11.9355577771 + 0.0115384615385)) / (11.2574928233 / (11.2574928233 + 0.00744878957169))
=0.9990342 / 0.99933876
=0.9997

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) / (6.96738726446 / 24.6842888778)
=0.34274032 / 0.28226
=1.2143

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 -3.63 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 2.59030.92540.61580.62032.52720.1951.33574.09640.6090.4684
GMI 111111111.12880.9696
AQI 0.7811.58460.29821.60010.86180.3481.03451.57688.47660.9412
SGI 0.44491.30890.51532.10120.52791.22880.80640.1965.72232.5951
DEPI 1.59390.71890.90820.82070.87330.80321.25630.66030.58770.9984
SGAI 1.21380.90511.59550.54221.82360.90070.84351.20180.37190.5209
LVGI 0.20.92630.61321.44831.06790.70071.66230.45119.89960.8021
TATA 0.00030.017-0.07160.0202-0.4064-0.6480.071-0.4007-0.0228-0.1394
M-score -1.31-1.95-3.87-1.60-3.63-6.22-2.16-1.881.50-2.09

Merus Labs International Inc Quarterly Data

Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14
DSRI 2.11751.47981.3210.85460.72481.22080.4470.370.39360.1685
GMI 1.13921.1531.06350.96270.94610.92290.97221.02751.07861.1368
AQI 6.73756.5490.99571.20821.0211.19980.94120.93970.76870.6106
SGI 0.58991.3492.15616.41623.95613.15922.71911.57811.37011.1065
DEPI 0.87990.54651.00250.98140.99220.99520.99841.00030.99950.9997
SGAI 0.86740.45910.52980.47750.3760.52730.52110.75311.0571.2143
LVGI 0.45250.56131.04445.033517.062115.8860.80210.80830.59840.4932
TATA -0.09660.011-0.0233-0.0097-0.0553-0.136-0.1305-0.1829-0.1428-0.111
M-score 0.310.83-1.161.01-5.52-5.73-1.96-3.30-3.31-3.63
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