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Beneish M-Score 6.67 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.
Pain Therapeutics Inc has a M-score of 6.67 signals that the company is a manipulator.
During the past 13 years, the highest Beneish M-Score of Pain Therapeutics Inc was 6.67. The lowest was -3.81. And the median was -2.27.
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 Pain Therapeutics 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||+||0.528 * 1||+||0.404 * 0||+||0.892 * 3.9657||+||0.115 * 26.3333|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.1807||+||4.679 * 0.7671||-||0.327 * 0.1935|
|This Year (Mar14) TTM:||Last Year (Mar13) TTM:|
|Accounts Receivable was $0.00 Mil.|
Revenue was 0 + 35.244 + 1.958 + 1.959 = $39.16 Mil.
Gross Profit was 0 + 35.244 + 1.958 + 1.959 = $39.16 Mil.
Total Current Assets was $47.24 Mil.
Total Assets was $47.32 Mil.
Property, Plant and Equipment(Net PPE) was $0.08 Mil.
Depreciation, Depletion and Amortization(DDA) was $0.00 Mil.
Selling, General & Admin. Expense(SGA) was $4.94 Mil.
Total Current Liabilities was $1.62 Mil.
Long-Term Debt was $0.00 Mil.
Net Income was -3.45 + 33.015 + -0.762 + -0.301 = $28.50 Mil.
Non Operating Income was 0 + 0 + 0 + 0 = $0.00 Mil.
Cash Flow from Operations was -2.723 + -1.454 + -1.819 + -1.801 = $-7.80 Mil.
|Accounts Receivable was $0.00 Mil.
Revenue was 1.958 + 2.468 + 2.725 + 2.724 = $9.88 Mil.
Gross Profit was 1.958 + 2.468 + 2.725 + 2.724 = $9.88 Mil.
Total Current Assets was $54.52 Mil.
Total Assets was $54.87 Mil.
Property, Plant and Equipment(Net PPE) was $0.00 Mil.
Depreciation, Depletion and Amortization(DDA) was $0.09 Mil.
Selling, General & Admin. Expense(SGA) was $6.89 Mil.
Total Current Liabilities was $9.69 Mil.
Long-Term Debt was $0.00 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)|
|=||(0 / 39.161)||/||(0 / 9.875)|
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)|
|=||(35.244 / 9.875)||/||(0 / 39.161)|
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 - (47.243 + 0.076) / 47.319)||/||(1 - (54.518 + 0) / 54.87)|
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))|
|=||(0.087 / (0.087 + 0))||/||(0.003 / (0.003 + 0.076))|
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)|
|=||(4.936 / 39.161)||/||(6.887 / 9.875)|
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)|
|=||((0 + 1.618) / 47.319)||/||((0 + 9.694) / 54.87)|
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|
|=||(28.502 - 0||-||-7.797)||/||47.319|
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.
Pain Therapeutics Inc has a M-score of 6.67 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
Pain Therapeutics Inc Annual Data
Pain Therapeutics Inc Quarterly Data