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Merus Labs International Inc (NAS:MSLI)
Beneish M-Score
-3.68 (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 -3.73 suggests that the company is not a manipulator.

MSLI' s 10-Year Beneish M-Score Range
Min: -6.74   Max: 348.84
Current: -3.68

-6.74
348.84

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.


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 * 0.1821+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
=-3.73

* 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

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)
=(2.3605549865 / 26.4509656117) / (12.1884615385 / 24.8755916256)
=0.08924268 / 0.48997675
=0.1821

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)
=(4.98544131028 / 24.8755916256) / (5.41763665146 / 26.4509656117)
=0.92350635 / 0.84172577
=1.0972

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 - (63.2684607505 + 0.0074494831921) / 123.085948412) / (1 - (18.5576923077 + 0.0115384615385) / 90.9355769231)
=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
=26.4509656117 / 24.8755916256
=1.0633

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))
=0.99906573 / 0.99930149
=0.9998

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)
=0.33541986 / 0.29259159
=1.1464

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)
=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
=(-3.25920184771 - 0.647131224939 - 11.6949943424) / 123.085948412
=-0.1268

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.


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 1.26270.99031.24770.62751.78810.1852.17490.19310.41520.5386
GMI 111111111.12880.9696
AQI 0.77291.37550.34271.60010.86180.3481.03451.57688.47660.9412
SGI 1.01961.12060.23362.10120.72730.89180.80640.1965.72232.5951
DEPI 0.94351.13491.00350.82070.87330.80321.25630.66030.58770.9984
SGAI 1.0520.97451.69060.54221.32341.2410.84351.20180.37190.5209
LVGI 0.20430.81290.69881.44831.06790.70071.66230.45119.89960.8021
TATA -0.02390.0182-0.07160.0204-0.1994-0.6480.071-0.4007-0.0228-0.1534
M-score -2.18-2.06-3.56-1.59-3.08-6.59-1.39-5.4810.53-2.09

Merus Labs International Inc Quarterly Data

Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14
DSRI 43.448131.41211.06420.87051.09811.16650.52650.41180.44730.1821
GMI 1.13921.1531.06350.96270.9470.93910.96941.0251.07611.0972
AQI 6.73756.5490.99571.20821.0211.19980.94120.93970.76870.6106
SGI 0.58991.3492.15616.41624.02983.18372.65491.53911.29431.0633
DEPI 0.87990.54651.00250.98140.99210.99510.99841.00030.99960.9998
SGAI 0.86740.45910.52980.47750.37880.54660.52110.75531.04911.1464
LVGI 0.45250.56131.04445.033517.062115.8860.80210.80830.59840.4932
TATA -0.09660.011-0.0233-0.0097-0.0637-0.1341-0.1515-0.2052-0.1533-0.1268
M-score 38.3328.37-1.401.02-5.15-5.75-2.04-3.41-3.37-3.73
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