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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.
During the past 13 years, the highest Beneish M-Score of Merus Labs International Inc was 348.84. The lowest was -6.02. And the median was -2.00.
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 * 1.4332||+||0.528 * 1.2012||+||0.404 * 1.1325||+||0.892 * 1.8562||+||0.115 * 1.0037|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0442||+||4.679 * -0.0913||-||0.327 * 1.7695|
|This Year (Dec16) TTM:||Last Year (Dec15) TTM:|
|Accounts Receivable was $23.48 Mil.|
Revenue was 19.5434440363 + 22.7265791883 + 19.8984023577 + 14.897928323 = $77.07 Mil.
Gross Profit was 13.4560311867 + 14.4675007629 + 13.0572359237 + 10.507334039 = $51.49 Mil.
Total Current Assets was $38.68 Mil.
Total Assets was $270.52 Mil.
Property, Plant and Equipment(Net PPE) was $0.23 Mil.
Depreciation, Depletion and Amortization(DDA) was $29.54 Mil.
Selling, General & Admin. Expense(SGA) was $19.27 Mil.
Total Current Liabilities was $46.36 Mil.
Long-Term Debt was $75.74 Mil.
Net Income was -4.73573731164 + -0.0503509307293 + -3.91887699705 + -2.59035233631 = $-11.30 Mil.
Non Operating Income was -0.305870005248 + -1.71116875191 + -0.515743756786 + 0.664600030243 = $-1.87 Mil.
Cash Flow from Operations was 3.68918209761 + 5.96505950565 + 1.20598728091 + 4.40949644639 = $15.27 Mil.
|Accounts Receivable was $8.83 Mil.
Revenue was 11.6137971268 + 12.1694557515 + 7.68701981399 + 10.0491361547 = $41.52 Mil.
Gross Profit was 8.24327280683 + 9.13990652797 + 7.0303275374 + 8.90553178 = $33.32 Mil.
Total Current Assets was $45.88 Mil.
Total Assets was $188.38 Mil.
Property, Plant and Equipment(Net PPE) was $0.08 Mil.
Depreciation, Depletion and Amortization(DDA) was $20.44 Mil.
Selling, General & Admin. Expense(SGA) was $9.94 Mil.
Total Current Liabilities was $16.43 Mil.
Long-Term Debt was $31.62 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)|
|=||(23.4770222655 / 77.0663539053)||/||(8.82520236272 / 41.5194088471)|
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)|
|=||(33.3190386522 / 41.5194088471)||/||(51.4881019123 / 77.0663539053)|
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 - (38.6828098058 + 0.231651548092) / 270.516530475)||/||(1 - (45.8783635966 + 0.0845912637643) / 188.376722818)|
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))|
|=||(20.4351716716 / (20.4351716716 + 0.0845912637643))||/||(29.5405778316 / (29.5405778316 + 0.231651548092))|
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)|
|=||(19.2668369582 / 77.0663539053)||/||(9.9401770871 / 41.5194088471)|
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)|
|=||((75.7403103681 + 46.3572981483) / 270.516530475)||/||((31.6218187122 + 16.427477576) / 188.376722818)|
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|
|=||(-11.2953175757 - -1.8681824837||-||15.2697253306)||/||270.516530475|
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 -1.84 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