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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 PDL BioPharma Inc was 145.02. The lowest was -5.18. And the median was -2.45.
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 * 1.3291||+||0.528 * 1||+||0.404 * 1.0737||+||0.892 * 0.919||+||0.115 * 2.3215|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.7928||+||4.679 * 0.0151||-||0.327 * 0.6736|
|This Year (Sep15) TTM:||Last Year (Sep14) TTM:|
|Accounts Receivable was $67.8 Mil.|
Revenue was 124.618 + 138.066 + 149.706 + 117.075 = $529.5 Mil.
Gross Profit was 124.618 + 138.066 + 149.706 + 117.075 = $529.5 Mil.
Total Current Assets was $306.7 Mil.
Total Assets was $1,020.6 Mil.
Property, Plant and Equipment(Net PPE) was $0.0 Mil.
Depreciation, Depletion and Amortization(DDA) was $0.0 Mil.
Selling, General & Admin. Expense(SGA) was $41.3 Mil.
Total Current Liabilities was $94.6 Mil.
Long-Term Debt was $281.6 Mil.
Net Income was 69.459 + 78.264 + 84.498 + 55.071 = $287.3 Mil.
Non Operating Income was -9.096 + -8.966 + -10.534 + 0 = $-28.6 Mil.
Cash Flow from Operations was 75.486 + 84.054 + 71.846 + 69.042 = $300.4 Mil.
|Accounts Receivable was $55.5 Mil.
Revenue was 164.594 + 162.752 + 136.804 + 111.966 = $576.1 Mil.
Gross Profit was 164.594 + 162.752 + 136.804 + 111.966 = $576.1 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 $0.2 Mil.
Selling, General & Admin. Expense(SGA) was $25.0 Mil.
Total Current Liabilities was $261.6 Mil.
Long-Term Debt was $274.5 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)|
|=||(67.84 / 529.465)||/||(55.539 / 576.116)|
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)|
|=||(138.066 / 576.116)||/||(124.618 / 529.465)|
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 - (306.688 + 0.042) / 1020.601)||/||(1 - (341.439 + 0.072) / 979.869)|
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))|
|=||(0.188 / (0.188 + 0.072))||/||(0.019 / (0.019 + 0.042))|
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)|
|=||(41.271 / 529.465)||/||(25.049 / 576.116)|
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)|
|=||((281.581 + 94.589) / 1020.601)||/||((274.512 + 261.639) / 979.869)|
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|
|=||(287.292 - -28.596||-||300.428)||/||1020.601|
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 -2.03 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