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Merus Labs International Inc (NAS:MSLI)
Beneish M-Score
-3.48 (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 -3.55 suggests that the company is not a manipulator.

MSLI' s 10-Year Beneish M-Score Range
Min: -6.92   Max: 348.84
Current: -3.48

-6.92
348.84

During the past 13 years, the highest Beneish M-Score of Merus Labs International Inc was 348.84. The lowest was -6.92. And the median was -2.13.


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 * 0.1592+0.528 * 1.1551+0.404 * 0.6106+0.892 * 1.1961+0.115 * 0.9996
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.1846+4.679 * -0.1124-0.327 * 0.4932
=-3.55

* 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 $2.34 Mil.
Revenue was 6.63434903047 + 6.02160216022 + 5.88063909774 + 8.833655706 = $27.37 Mil.
Gross Profit was 5.37211449677 + 4.93159315932 + 4.95676691729 + 7.36943907157 = $22.63 Mil.
Total Current Assets was $62.74 Mil.
Total Assets was $122.05 Mil.
Property, Plant and Equipment(Net PPE) was $0.01 Mil.
Depreciation, Depletion and Amortization(DDA) was $11.29 Mil.
Selling, General & Admin. Expense(SGA) was $9.39 Mil.
Total Current Liabilities was $11.29 Mil.
Long-Term Debt was $22.13 Mil.
Net Income was -0.158818097876 + -1.3096309631 + -1.77255639098 + -0.0512572533849 = $-3.29 Mil.
Non Operating Income was -0.000923361034164 + -0.004500450045 + -0.00187969924812 + -1.14216634429 = $-1.15 Mil.
Cash Flow from Operations was 2.92890120037 + 2.63906390639 + 2.99530075188 + 3.01740812379 = $11.58 Mil.
Accounts Receivable was $12.29 Mil.
Revenue was 7.28709990301 + 5.3349609375 + 6.33939393939 + 3.92126789366 = $22.88 Mil.
Gross Profit was 6.85354025218 + 5.0791015625 + 6.10808080808 + 3.81390593047 = $21.85 Mil.
Total Current Assets was $18.72 Mil.
Total Assets was $91.73 Mil.
Property, Plant and Equipment(Net PPE) was $0.01 Mil.
Depreciation, Depletion and Amortization(DDA) was $11.29 Mil.
Selling, General & Admin. Expense(SGA) was $6.62 Mil.
Total Current Liabilities was $38.07 Mil.
Long-Term Debt was $12.85 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)
=(2.34072022161 / 27.3702459944) / (12.2948593598 / 22.8827226736)
=0.08552061 / 0.5372988
=0.1592

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)
=(4.93159315932 / 22.8827226736) / (5.37211449677 / 27.3702459944)
=0.95507116 / 0.8268071
=1.1551

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 - (62.7368421053 + 0.00738688827331) / 122.051708218) / (1 - (18.7196896217 + 0.011639185257) / 91.7293889428)
=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
=27.3702459944 / 22.8827226736
=1.1961

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))
=(11.2946469096 / (11.2946469096 + 0.011639185257)) / (11.2862262037 / (11.2862262037 + 0.00738688827331))
=0.99897056 / 0.99934592
=0.9996

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)
=(9.38585103848 / 27.3702459944) / (6.62400305293 / 22.8827226736)
=0.34292169 / 0.28947618
=1.1846

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)
=((22.1283471837 + 11.2890120037) / 122.051708218) / ((12.8506304559 + 38.07371484) / 91.7293889428)
=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
=(-3.29226270533 - -1.14946985462 - 11.5806739824) / 122.051708218
=-0.1124

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 -3.55 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 2.59030.91090.56570.62751.82133.81820.0047149.79310.4785
GMI 111111111.10330.992
AQI 0.7811.58460.29821.60010.86180.3481.03451.576813.36590.9412
SGI 0.44411.35080.52181.97190.62280.05091.989408.78582.9
DEPI 1.59390.71890.90820.82070.87331.32970.90080.55630.3270.9981
SGAI 1.21380.90511.59550.54221.82364.71370.376110.20940.4764
LVGI 0.20.92630.61321.44831.06790.70071.70540.43974.33690.805
TATA 0.00030.017-0.07160.0202-0.4064-0.69230.07150.0927-0.2414-0.1394
M-score -1.31-1.93-3.91-1.71-4.20-4.74-2.30-2.5752.24-1.79

Merus Labs International Inc Quarterly Data

Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14
DSRI 4.5786.16950.60421.00591.18221.2890.46280.36410.37830.1592
GMI 1.14531.1530.97480.94460.92320.90810.99251.05011.09931.1551
AQI 6.73755.44250.99571.20821.0211.19980.94120.93970.76870.6106
SGI 5.72168.99413.83655.62453.72862.94642.9981.7861.52121.1961
DEPI 0.62790.62571.00290.98590.99220.99530.99811.00020.99940.9996
SGAI 0.38290.23270.54670.4670.35050.53710.47630.72641.04531.1846
LVGI 0.45250.44881.04065.033517.062115.8860.8050.80830.59840.4932
TATA -0.07310.018-0.2441-0.2502-0.3019-0.3733-0.1386-0.1797-0.1456-0.1124
M-score 7.3211.64-1.41-0.69-6.46-6.98-1.71-3.09-3.19-3.55
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