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Beneish M-Score 40.96 higher than -2.22, which implies that it might have manipulated its financial results.
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 PDL BioPharma Inc was 147.96. The lowest was -5.18. And the median was -2.50.
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 PDL BioPharma 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 * 46.5403||+||0.528 * 1.0321||+||0.404 * 2.8956||+||0.892 * 1.3259||+||0.115 * 0.9275|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.6377||+||4.679 * 0.0643||-||0.327 * 0.6598|
|This Year (Sep14) TTM:||Last Year (Sep13) TTM:|
|Accounts Receivable was $55.5 Mil.|
Revenue was 164.594 + 162.752 + 139.664 + 98.627 = $565.6 Mil.
Gross Profit was 164.594 + 162.752 + 127.733 + 92.99 = $548.1 Mil.
Total Current Assets was $341.4 Mil.
Total Assets was $979.9 Mil.
Property, Plant and Equipment(Net PPE) was $0.1 Mil.
Depreciation, Depletion and Amortization(DDA) was $5.0 Mil.
Selling, General & Admin. Expense(SGA) was $25.0 Mil.
Total Current Liabilities was $261.6 Mil.
Long-Term Debt was $274.5 Mil.
Net Income was 102.235 + 92.055 + 72.883 + 61.092 = $328.3 Mil.
Non Operating Income was -13.076 + -12.613 + -6.143 + 11.516 = $-20.3 Mil.
Cash Flow from Operations was 77.086 + 54.374 + 91.779 + 62.355 = $285.6 Mil.
|Accounts Receivable was $0.9 Mil.
Revenue was 100.178 + 148.52 + 91.847 + 86.046 = $426.6 Mil.
Gross Profit was 100.178 + 148.52 + 91.847 + 86.046 = $426.6 Mil.
Total Current Assets was $333.0 Mil.
Total Assets was $429.7 Mil.
Property, Plant and Equipment(Net PPE) was $0.0 Mil.
Depreciation, Depletion and Amortization(DDA) was $0.5 Mil.
Selling, General & Admin. Expense(SGA) was $29.6 Mil.
Total Current Liabilities was $209.3 Mil.
Long-Term Debt was $147.0 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)|
|=||(55.539 / 565.637)||/||(0.9 / 426.591)|
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)|
|=||(162.752 / 426.591)||/||(164.594 / 565.637)|
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 - (341.439 + 0.072) / 979.869)||/||(1 - (332.954 + 0.047) / 429.672)|
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))|
|=||(0.502 / (0.502 + 0.047))||/||(5.017 / (5.017 + 0.072))|
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)|
|=||(25.049 / 565.637)||/||(29.626 / 426.591)|
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)|
|=||((274.512 + 261.639) / 979.869)||/||((147.015 + 209.29) / 429.672)|
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|
|=||(328.265 - -20.316||-||285.594)||/||979.869|
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.
PDL BioPharma Inc has a M-score of 40.96 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
PDL BioPharma Inc Annual Data
PDL BioPharma Inc Quarterly Data