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GuruFocus has detected 3 Warning Signs with PDL BioPharma Inc $PDLI.
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PDL BioPharma Inc (NAS:PDLI)
Beneish M-Score
1.35 (As of Today)

Warning Sign:

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.

PDL BioPharma Inc has a M-score of 1.35 signals that the company is a manipulator.

PDLI' s Beneish M-Score Range Over the Past 10 Years
Min: -4.58   Max: 10000000
Current: 1.35

-4.58
10000000

During the past 13 years, the highest Beneish M-Score of PDL BioPharma Inc was 10000000.00. The lowest was -4.58. And the median was -2.20.


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 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 * 6.2619+0.528 * 1.0169+0.404 * 0.9331+0.892 * 0.4138+0.115 * 0
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 2.7007+4.679 * -0.0044-0.327 * 1.1375
=1.35

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

This Year (Dec16) TTM:Last Year (Dec15) TTM:
Accounts Receivable was $151.3 Mil.
Revenue was 66.492 + 53.638 + 21.047 + 103.124 = $244.3 Mil.
Gross Profit was 62.427 + 53.638 + 21.047 + 103.124 = $240.2 Mil.
Total Current Assets was $398.0 Mil.
Total Assets was $1,215.4 Mil.
Property, Plant and Equipment(Net PPE) was $0.0 Mil.
Depreciation, Depletion and Amortization(DDA) was $12.0 Mil.
Selling, General & Admin. Expense(SGA) was $40.3 Mil.
Total Current Liabilities was $130.3 Mil.
Long-Term Debt was $232.4 Mil.
Net Income was -10.336 + 13.907 + 4.148 + 55.887 = $63.6 Mil.
Non Operating Income was -7.856 + -8.594 + -7.343 + -8.964 = $-32.8 Mil.
Cash Flow from Operations was 15.653 + -8.687 + 2.246 + 92.506 = $101.7 Mil.
Accounts Receivable was $58.4 Mil.
Revenue was 178.058 + 124.618 + 138.066 + 149.706 = $590.4 Mil.
Gross Profit was 178.058 + 124.618 + 138.066 + 149.706 = $590.4 Mil.
Total Current Assets was $282.7 Mil.
Total Assets was $1,012.2 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 $36.1 Mil.
Total Current Liabilities was $36.7 Mil.
Long-Term Debt was $228.9 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)
=(151.302 / 244.301) / (58.398 / 590.448)
=0.61932616 / 0.09890456
=6.2619

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)
=(590.448 / 590.448) / (240.236 / 244.301)
=1 / 0.98336069
=1.0169

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 - (398.031 + 0.038) / 1215.387) / (1 - (282.71 + 0.031) / 1012.205)
=0.67247552 / 0.72066824
=0.9331

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
=244.301 / 590.448
=0.4138

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))
=(-3.46944695195E-18 / (-3.46944695195E-18 + 0.031)) / (12.028 / (12.028 + 0.038))
=-0 / 0.99685065
=0

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)
=(40.328 / 244.301) / (36.09 / 590.448)
=0.16507505 / 0.06112308
=2.7007

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)
=((232.443 + 130.315) / 1215.387) / ((228.862 + 36.741) / 1012.205)
=0.29847119 / 0.2624004
=1.1375

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
=(63.606 - -32.757 - 101.718) / 1215.387
=-0.0044

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.


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 local exchange's currency.

PDL BioPharma Inc Annual Data

Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15Dec16
DSRI 0.2291.9990.07190.4121.2190.57980.68436.2619
GMI 11111111.0169
AQI 0.28990.4131.35511.52271.32292.5962.31640.9331
SGI 1.20051.3081.08151.08421.04951.0521.19790.4138
DEPI 1.23910.17651.11681.05960.81751.0461.03680
SGAI 1.07580.9570.37795.8630.13051.32020.97532.7007
LVGI 0.97865.04640.79030.8470.89640.68590.65441.1375
TATA -0.0738-0.06150.0035-0.23610.11270.01970.0253-0.0044
M-score -3.62-3.22-2.91-4.62-1.41-2.03-1.821.35

PDL BioPharma Inc Quarterly Data

Sep14Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16Dec16
DSRI 46.37450.77854.13377.36841.3291191.61931.45710.0590.5716.2619
GMI 1111111111.0169
AQI 2.89560.78570.94460.84291.07371.14371.16711.11.01220.9331
SGI 1.33071.28441.19431.11280.9191.01590.91540.74960.67210.4138
DEPI 1.26464.05595194486E+15-0.44650.34790.459-243.2353-3.63391.5795-0
SGAI 0.63540.91351.17181.2681.79281.01751.10021.30931.43292.7007
LVGI 0.65980.6440.77120.6710.67360.5440.44180.57210.79521.1375
TATA 0.09410.08740.07840.06420.02810.06030.00970.01550.0365-0.0044
M-score 40.97466,434,473,658,722.060.803.70-2.18173.053.00-3.90-2.931.35
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