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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 * 1.2118||+||0.528 * 1.0527||+||0.404 * 1.0796||+||0.892 * 1.0001||+||0.115 * 1.0067|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.007||+||4.679 * -0.1022||-||0.327 * 0.872|
|This Year (Dec14) TTM:||Last Year (Dec13) TTM:|
|Accounts Receivable was $6.19 Mil.|
Revenue was 9.21609434617 + 5.46635182999 + 6.63434903047 + 6.02160216022 = $27.34 Mil.
Gross Profit was 8.12348248352 + 4.61992552902 + 5.37211449677 + 4.93159315932 = $23.05 Mil.
Total Current Assets was $20.77 Mil.
Total Assets was $167.95 Mil.
Property, Plant and Equipment(Net PPE) was $0.11 Mil.
Depreciation, Depletion and Amortization(DDA) was $14.25 Mil.
Selling, General & Admin. Expense(SGA) was $8.25 Mil.
Total Current Liabilities was $18.26 Mil.
Long-Term Debt was $51.04 Mil.
Net Income was -0.187304890739 + -4.13132322223 + -0.158818097876 + -1.3096309631 = $-5.79 Mil.
Non Operating Income was 0 + -0.112614658069 + -0.000923361034164 + -0.004500450045 = $-0.12 Mil.
Cash Flow from Operations was 2.76795005203 + 3.15502679139 + 2.92890120037 + 2.63906390639 = $11.49 Mil.
|Accounts Receivable was $5.11 Mil.
Revenue was 5.88063909774 + 8.833655706 + 7.28709990301 + 5.3349609375 = $27.34 Mil.
Gross Profit was 4.95676691729 + 7.36943907157 + 6.85354025218 + 5.0791015625 = $24.26 Mil.
Total Current Assets was $15.41 Mil.
Total Assets was $81.61 Mil.
Property, Plant and Equipment(Net PPE) was $0.01 Mil.
Depreciation, Depletion and Amortization(DDA) was $11.09 Mil.
Selling, General & Admin. Expense(SGA) was $8.20 Mil.
Total Current Liabilities was $12.34 Mil.
Long-Term Debt was $26.28 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)|
|=||(6.19146722164 / 27.3383973668)||/||(5.10902255639 / 27.3363556442)|
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)|
|=||(4.61992552902 / 27.3363556442)||/||(8.12348248352 / 27.3383973668)|
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 - (20.771765522 + 0.10752688172) / 167.94658342)||/||(1 - (15.4060150376 + 0.0093984962406) / 81.6071428571)|
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))|
|=||(11.0913185361 / (11.0913185361 + 0.0093984962406))||/||(14.2476531803 / (14.2476531803 + 0.10752688172))|
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)|
|=||(8.25484697968 / 27.3383973668)||/||(8.19717653845 / 27.3363556442)|
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)|
|=||((51.0379812695 + 18.262226847) / 167.94658342)||/||((26.2781954887 + 12.3383458647) / 81.6071428571)|
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|
|=||(-5.78707717394 - -0.118038469148||-||11.4909419502)||/||167.94658342|
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 -2.66 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