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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.
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.
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|
|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
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)|
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)|
|=||(7.0303275374 / 24.0029421184)||/||(9.13990652797 / 39.1217060664)|
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 - (46.9810040706 + 0.0897030001508) / 198.992914217)||/||(1 - (19.4714376533 + 0.117155571701) / 179.995459086)|
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))|
|=||(11.9127814667 / (11.9127814667 + 0.117155571701))||/||(20.2320315294 / (20.2320315294 + 0.0897030001508))|
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)|
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)|
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|
|=||(-0.207537304487 - 1.15860093472||-||16.3458570656)||/||198.992914217|
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.
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