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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 Questcor Pharmaceuticals Inc was 3.89. The lowest was -5.65. 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 Questcor Pharmaceuticals 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 * 0.9535||+||0.528 * 1.0067||+||0.404 * 0.5632||+||0.892 * 1.5875||+||0.115 * 0.3894|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9055||+||4.679 * -0.0715||-||0.327 * 0.8207|
|This Year (Jun14) TTM:||Last Year (Jun13) TTM:|
|Accounts Receivable was $107.0 Mil.|
Revenue was 278.83 + 227.104 + 242.881 + 236.346 = $985.2 Mil.
Gross Profit was 255.678 + 205.694 + 221.96 + 216.312 = $899.6 Mil.
Total Current Assets was $595.2 Mil.
Total Assets was $907.8 Mil.
Property, Plant and Equipment(Net PPE) was $36.4 Mil.
Depreciation, Depletion and Amortization(DDA) was $19.3 Mil.
Selling, General & Admin. Expense(SGA) was $263.6 Mil.
Total Current Liabilities was $187.7 Mil.
Long-Term Debt was $13.2 Mil.
Net Income was 96.436 + 74.31 + 89.983 + 94.441 = $355.2 Mil.
Non Operating Income was 0.06 + -0.154 + -0.06 + 0 = $-0.2 Mil.
Cash Flow from Operations was 99.357 + 106.074 + 105.931 + 108.856 = $420.2 Mil.
|Accounts Receivable was $70.7 Mil.
Revenue was 184.573 + 135.129 + 160.532 + 140.339 = $620.6 Mil.
Gross Profit was 167.352 + 118.94 + 151.376 + 132.84 = $570.5 Mil.
Total Current Assets was $214.5 Mil.
Total Assets was $539.7 Mil.
Property, Plant and Equipment(Net PPE) was $33.7 Mil.
Depreciation, Depletion and Amortization(DDA) was $5.3 Mil.
Selling, General & Admin. Expense(SGA) was $183.4 Mil.
Total Current Liabilities was $130.4 Mil.
Long-Term Debt was $15.1 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)|
|=||(106.954 / 985.161)||/||(70.659 / 620.573)|
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)|
|=||(205.694 / 620.573)||/||(255.678 / 985.161)|
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 - (595.239 + 36.409) / 907.838)||/||(1 - (214.463 + 33.704) / 539.728)|
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))|
|=||(5.252 / (5.252 + 33.704))||/||(19.284 / (19.284 + 36.409))|
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)|
|=||(263.561 / 985.161)||/||(183.357 / 620.573)|
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)|
|=||((13.181 + 187.734) / 907.838)||/||((15.125 + 130.416) / 539.728)|
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|
|=||(355.17 - -0.154||-||420.218)||/||907.838|
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.
Questcor Pharmaceuticals Inc has a M-score of -2.50 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
Questcor Pharmaceuticals Inc Annual Data
Questcor Pharmaceuticals Inc Quarterly Data