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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.
Merus Labs International Inc has a M-score of -3.73 suggests that the company is not a manipulator.
During the past 13 years, the highest Beneish M-Score of Merus Labs International Inc was 348.84. The lowest was -6.74. And the median was -2.30.
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 * 0.1821||+||0.528 * 1.0972||+||0.404 * 0.6106||+||0.892 * 1.0633||+||0.115 * 0.9998|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.1464||+||4.679 * -0.1268||-||0.327 * 0.4932|
* 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 6.69056709191 + 6.08735213831 + 5.71937842779 + 7.95366795367 = $26.45 Mil.
Gross Profit was 5.41763665146 + 4.98544131028 + 4.82084095064 + 7.04054054054 = $22.26 Mil.
Total Current Assets was $63.27 Mil.
Total Assets was $123.09 Mil.
Property, Plant and Equipment(Net PPE) was $0.01 Mil.
Depreciation, Depletion and Amortization(DDA) was $10.66 Mil.
Selling, General & Admin. Expense(SGA) was $8.87 Mil.
Total Current Liabilities was $11.38 Mil.
Long-Term Debt was $22.32 Mil.
Net Income was -0.16016388863 + -1.32393084622 + -1.7239488117 + -0.0511583011583 = $-3.26 Mil.
Non Operating Income was -0.000931185399013 + -0.00454959053685 + -0.0018281535649 + 0.65444015444 = $0.65 Mil.
Cash Flow from Operations was 2.95372008567 + 2.66787989081 + 2.91316270567 + 3.16023166023 = $11.69 Mil.
|Accounts Receivable was $12.19 Mil.
Revenue was 7.03653846154 + 5.73994111874 + 7.03528225806 + 5.06382978723 = $24.88 Mil.
Gross Profit was 6.23653846154 + 5.43768400393 + 6.66733870968 + 4.63120567376 = $22.97 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 $12.34 Mil.
Selling, General & Admin. Expense(SGA) was $7.28 Mil.
Total Current Liabilities was $37.74 Mil.
Long-Term Debt was $12.74 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)|
|=||(2.3605549865 / 26.4509656117)||/||(12.1884615385 / 24.8755916256)|
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)|
|=||(4.98544131028 / 24.8755916256)||/||(5.41763665146 / 26.4509656117)|
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 - (63.2684607505 + 0.0074494831921) / 123.085948412)||/||(1 - (18.5576923077 + 0.0115384615385) / 90.9355769231)|
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))|
|=||(12.3386981107 / (12.3386981107 + 0.0115384615385))||/||(10.6573749806 / (10.6573749806 + 0.0074494831921))|
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)|
|=||(8.87217919665 / 26.4509656117)||/||(7.27838881198 / 24.8755916256)|
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)|
|=||((22.3158580873 + 11.3846726883) / 123.085948412)||/||((12.7394230769 + 37.7442307692) / 90.9355769231)|
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|
|=||(-3.25920184771 - 0.647131224939||-||11.6949943424)||/||123.085948412|
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 -3.73 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