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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 173.41. 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 * 0.571||+||0.528 * 1||+||0.404 * 1.0122||+||0.892 * 0.6721||+||0.115 * 0.3123|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.4329||+||4.679 * 0.0365||-||0.327 * 0.7952|
|This Year (Sep16) TTM:||Last Year (Sep15) TTM:|
|Accounts Receivable was $26.0 Mil.|
Revenue was 53.638 + 21.047 + 103.124 + 178.058 = $355.9 Mil.
Gross Profit was 53.638 + 21.047 + 103.124 + 178.058 = $355.9 Mil.
Total Current Assets was $355.1 Mil.
Total Assets was $1,216.1 Mil.
Property, Plant and Equipment(Net PPE) was $0.0 Mil.
Depreciation, Depletion and Amortization(DDA) was $6.0 Mil.
Selling, General & Admin. Expense(SGA) was $39.7 Mil.
Total Current Liabilities was $121.5 Mil.
Long-Term Debt was $234.9 Mil.
Net Income was 13.907 + 4.148 + 55.887 + 100.574 = $174.5 Mil.
Non Operating Income was -8.594 + -7.343 + -8.964 + -1.156 = $-26.1 Mil.
Cash Flow from Operations was -8.687 + 2.246 + 92.506 + 70.079 = $156.1 Mil.
|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.
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)|
|=||(26.035 / 355.867)||/||(67.84 / 529.465)|
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)|
|=||(529.465 / 529.465)||/||(355.867 / 355.867)|
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 - (355.056 + 0.016) / 1216.066)||/||(1 - (306.688 + 0.042) / 1020.601)|
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))|
|=||(0.019 / (0.019 + 0.042))||/||(6.041 / (6.041 + 0.016))|
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)|
|=||(39.749 / 355.867)||/||(41.271 / 529.465)|
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)|
|=||((234.895 + 121.514) / 1216.066)||/||((281.581 + 94.589) / 1020.601)|
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|
|=||(174.516 - -26.057||-||156.144)||/||1216.066|
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 -3.08 suggests that the company will not 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