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Merus Labs International Inc (NAS:MSLI)
Beneish M-Score
-1.13 (As of Today)

Warning Sign:

Beneish M-Score -1.13 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 -1.20 signals that the company is a manipulator.

MSLI' s Beneish M-Score Range Over the Past 10 Years
Min: -6.35   Max: 348.84
Current: -1.13

-6.35
348.84

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 -1.97.


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 * 1.7067+0.528 * 1.2625+0.404 * 1.138+0.892 * 1.807+0.115 * 1.0103
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.8103+4.679 * -0.0312-0.327 * 1.5393
=-1.20

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

This Year (Jun16) TTM:Last Year (Jun15) TTM:
Accounts Receivable was $16.97 Mil.
Revenue was 19.8984023577 + 14.897928323 + 11.6137971268 + 12.1694557515 = $58.58 Mil.
Gross Profit was 13.0572359237 + 10.507334039 + 8.34317800627 + 9.13990652797 = $41.05 Mil.
Total Current Assets was $28.85 Mil.
Total Assets was $286.25 Mil.
Property, Plant and Equipment(Net PPE) was $0.40 Mil.
Depreciation, Depletion and Amortization(DDA) was $25.79 Mil.
Selling, General & Admin. Expense(SGA) was $12.04 Mil.
Total Current Liabilities was $36.10 Mil.
Long-Term Debt was $91.53 Mil.
Net Income was -3.91887699705 + -2.59035233631 + -0.667250054693 + 0.017337554651 = $-7.16 Mil.
Non Operating Income was -0.515743756786 + 0.664600030243 + -1.48180558594 + -10.1929745213 = $-11.53 Mil.
Cash Flow from Operations was 1.20598728091 + 4.40949644639 + 5.01640778823 + 2.67375244987 = $13.31 Mil.
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.



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)
=(16.9722351481 / 58.579583559) / (5.50343712091 / 32.4186021448)
=0.28972953 / 0.1697617
=1.7067

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)
=(28.6792673299 / 32.4186021448) / (41.0476544969 / 58.579583559)
=0.88465466 / 0.70071605
=1.2625

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 - (28.8506281992 + 0.400186133085) / 286.247091671) / (1 - (42.0040436717 + 0.0930044480388) / 199.484027497)
=0.89781271 / 0.78897033
=1.138

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
=58.579583559 / 32.4186021448
=1.807

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))
=(18.1468424835 / (18.1468424835 + 0.0930044480388)) / (25.7916830647 / (25.7916830647 + 0.400186133085))
=0.99490103 / 0.98472098
=1.0103

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)
=(12.0390291883 / 58.579583559) / (8.22247881977 / 32.4186021448)
=0.20551579 / 0.25363459
=0.8103

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)
=((91.5309446254 + 36.1036140841) / 286.247091671) / ((41.3465426607 + 16.4391427416) / 199.484027497)
=0.44588945 / 0.28967575
=1.5393

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
=(-7.1591418334 - -11.5259238338 - 13.3056439654) / 286.247091671
=-0.0312

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 -1.20 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 local exchange's currency.

Merus Labs International Inc Annual Data

Sep06Sep07Sep08Sep09Sep10Sep11Sep12Sep13Sep14Sep15
DSRI 0.56570.62751.82133.81820.0047149.79310.47850.61421.9273
GMI 1111111.10330.9921.10320.9788
AQI 0.29821.60010.86180.3481.03451.576813.36590.94121.10290.8567
SGI 0.52181.97190.62280.05091.989408.78582.90.86511.5539
DEPI 0.90820.82070.87331.32970.90080.55630.3270.99811.00890.9948
SGAI 1.59550.54221.82364.71370.376110.20940.47641.37280.6323
LVGI 0.61321.44831.06790.70071.66230.45114.44930.8050.84940.6592
TATA -0.07160.0416-0.4064-0.69230.0715-0.4748-0.2363-0.1534-0.0703-0.0269
M-score -3.91-1.61-4.20-4.74-2.29-5.2352.23-1.86-3.20-1.15

Merus Labs International Inc Quarterly Data

Mar14Jun14Sep14Dec14Mar15Jun15Sep15Dec15Mar16Jun16
DSRI 0.35240.15330.61531.21181.5391.9851.83750.93851.38291.7067
GMI 1.09931.15511.10381.05270.99880.93460.9761.04741.14061.2625
AQI 0.76870.61061.10291.07961.31281.62370.85670.86331.0681.138
SGI 1.52121.19610.86361.00011.11931.18441.62991.51871.47831.807
DEPI 0.99940.99961.00891.00671.00491.00450.99470.99660.99791.0103
SGAI 1.04531.18461.37291.0070.78270.73960.63290.8040.87340.8103
LVGI 0.59840.49320.84940.8721.13251.0580.65920.61821.11591.5393
TATA -0.1577-0.1221-0.0713-0.0493-0.0629-0.0611-0.0182-0.0404-0.0348-0.0312
M-score -3.27-3.60-3.21-2.41-2.05-1.45-1.13-2.13-1.78-1.20
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