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Beneish M-Score 1.35 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 145.02. The lowest was -5.18. And the median was -2.47.
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 * 4.5595||+||0.528 * 1||+||0.404 * 0.9446||+||0.892 * 1.1943||+||0.115 * 1.4022|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.1718||+||4.679 * 0.0665||-||0.327 * 0.7712|
|This Year (Mar15) TTM:||Last Year (Mar14) TTM:|
|Accounts Receivable was $63.4 Mil.|
Revenue was 149.706 + 117.075 + 164.594 + 162.752 = $594.1 Mil.
Gross Profit was 149.706 + 117.075 + 164.594 + 162.752 = $594.1 Mil.
Total Current Assets was $500.7 Mil.
Total Assets was $1,114.1 Mil.
Property, Plant and Equipment(Net PPE) was $0.1 Mil.
Depreciation, Depletion and Amortization(DDA) was $0.1 Mil.
Selling, General & Admin. Expense(SGA) was $38.0 Mil.
Total Current Liabilities was $342.7 Mil.
Long-Term Debt was $278.0 Mil.
Net Income was 84.498 + 55.071 + 102.235 + 92.055 = $333.9 Mil.
Non Operating Income was -10.534 + 0 + -13.076 + -12.613 = $-36.2 Mil.
Cash Flow from Operations was 71.846 + 69.042 + 77.086 + 78.012 = $296.0 Mil.
|Accounts Receivable was $11.7 Mil.
Revenue was 136.804 + 111.966 + 100.178 + 148.52 = $497.5 Mil.
Gross Profit was 136.804 + 111.966 + 100.178 + 148.52 = $497.5 Mil.
Total Current Assets was $355.6 Mil.
Total Assets was $852.6 Mil.
Property, Plant and Equipment(Net PPE) was $0.0 Mil.
Depreciation, Depletion and Amortization(DDA) was $0.4 Mil.
Selling, General & Admin. Expense(SGA) was $27.2 Mil.
Total Current Liabilities was $345.0 Mil.
Long-Term Debt was $270.9 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)|
|=||(63.439 / 594.127)||/||(11.65 / 497.468)|
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)|
|=||(117.075 / 497.468)||/||(149.706 / 594.127)|
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 - (500.667 + 0.052) / 1114.133)||/||(1 - (355.6 + 0.035) / 852.579)|
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))|
|=||(0.399 / (0.399 + 0.035))||/||(0.099 / (0.099 + 0.052))|
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)|
|=||(37.998 / 594.127)||/||(27.151 / 497.468)|
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)|
|=||((277.975 + 342.748) / 1114.133)||/||((270.944 + 344.971) / 852.579)|
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|
|=||(333.859 - -36.223||-||295.986)||/||1114.133|
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 1.35 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