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Merus Labs International Inc (NAS:MSLI)
Beneish M-Score
-3.09 (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 -3.22 suggests that the company is not a manipulator.

MSLI' s 10-Year Beneish M-Score Range
Min: -6.85   Max: 860.26
Current: -3.09

-6.85
860.26

During the past 13 years, the highest Beneish M-Score of Merus Labs International Inc was 860.26. The lowest was -6.85. And the median was -2.04.


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 * 0.3378+0.528 * 1.0469+0.404 * 0.9397+0.892 * 1.7289+0.115 * 1.0002
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.727+4.679 * -0.1904-0.327 * 0.8083
=-3.22

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.

This Year (Dec13) TTM:Last Year (Dec12) TTM:
Accounts Receivable was $4.97 Mil.
Revenue was 5.71937842779 + 7.95366795367 + 7.03653846154 + 5.73994111874 = $26.45 Mil.
Gross Profit was 4.82084095064 + 7.04054054054 + 6.23653846154 + 5.43768400393 = $23.54 Mil.
Total Current Assets was $14.98 Mil.
Total Assets was $79.37 Mil.
Property, Plant and Equipment(Net PPE) was $0.01 Mil.
Depreciation, Depletion and Amortization(DDA) was $10.80 Mil.
Selling, General & Admin. Expense(SGA) was $7.94 Mil.
Total Current Liabilities was $12.00 Mil.
Long-Term Debt was $25.56 Mil.
Net Income was -1.7239488117 + -0.0511583011583 + -1.00769230769 + -2.25613346418 = $-5.04 Mil.
Non Operating Income was -0.0018281535649 + -0.519305019305 + -0.763461538462 + -0.871442590775 = $-2.16 Mil.
Cash Flow from Operations was 2.91316270567 + 3.16023166023 + 2.34807692308 + 3.80667320903 = $12.23 Mil.
Accounts Receivable was $8.51 Mil.
Revenue was 6.32661290323 + 3.88551165147 + 2.86489151874 + 2.22155085599 = $15.30 Mil.
Gross Profit was 6.09576612903 + 3.77912867275 + 2.45562130178 + 1.92044310171 = $14.25 Mil.
Total Current Assets was $12.57 Mil.
Total Assets was $91.89 Mil.
Property, Plant and Equipment(Net PPE) was $0.00 Mil.
Depreciation, Depletion and Amortization(DDA) was $6.62 Mil.
Selling, General & Admin. Expense(SGA) was $6.32 Mil.
Total Current Liabilities was $31.16 Mil.
Long-Term Debt was $22.64 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)
=(4.9689213894 / 26.4495259617) / (8.50907258065 / 15.2985669294)
=0.18786429 / 0.55620063
=0.3378

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)
=(7.04054054054 / 15.2985669294) / (4.82084095064 / 26.4495259617)
=0.93152249 / 0.88983084
=1.0469

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 - (14.9835466179 + 0.0091407678245) / 79.3692870201) / (1 - (12.5735887097 + 0.00403225806452) / 91.8881048387)
=0.81110215 / 0.86312025
=0.9397

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
=26.4495259617 / 15.2985669294
=1.7289

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))
=(6.62331723834 / (6.62331723834 + 0.00403225806452)) / (10.8007136662 / (10.8007136662 + 0.0091407678245))
=0.99939157 / 0.9991544
=1.0002

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)
=(7.94045303825 / 26.4495259617) / (6.31736156219 / 15.2985669294)
=0.30021154 / 0.41293813
=0.727

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)
=((25.5575868373 + 12) / 79.3692870201) / ((22.6350806452 + 31.158266129) / 91.8881048387)
=0.47320051 / 0.58542231
=0.8083

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
=(-5.03893288473 - -2.15603730211 - 12.228144498) / 79.3692870201
=-0.1904

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 -3.22 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 2.59030.92540.61580.62032.52724.09880.0029161.80420.4161
GMI 111111111.10330.992
AQI 0.7811.58460.29821.60010.86180.3481.03451.576813.36590.9412
SGI 0.44491.30890.51532.10120.52790.05851.968308.57932.9211
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 0.00030.017-0.07160.0202-0.4249-0.69230.07150.0927-0.2414-0.1394
M-score -1.31-1.95-3.87-1.60-3.72-4.47-2.32-2.5763.11-1.83

Merus Labs International Inc Quarterly Data

Nov11Dec11Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13
DSRI 1.38950.95080.22120.18140.74240.97740.7541.31090.41690.3378
GMI 1.13051.13611.14531.1530.97540.94490.92470.92520.9891.0469
AQI 13.673711.32966.73755.44250.99571.20821.0211.19980.94120.9397
SGI 0.74140.83585.64758.91713.83645.61023.80262.94222.91561.7289
DEPI -0.0692-0.07020.62640.62431.00290.98570.99220.99520.99811.0002
SGAI 0.7810.67250.38050.23190.54770.46930.35470.55830.47630.727
LVGI 5.0981.00480.45250.44881.04065.033517.062115.8860.8050.8083
TATA 0.0523-0.018-0.07330.0184-0.2435-0.2476-0.3058-0.372-0.1457-0.1904
M-score 1.661.423.246.06-1.28-0.72-6.81-6.95-1.87-3.22
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