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Beneish M-Score 0.68 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.
Questcor Pharmaceuticals Inc has a M-score of 0.68 signals that the company is a manipulator.
During the past 13 years, the highest Beneish M-Score of Questcor Pharmaceuticals Inc was 3.89. The lowest was -4.23. And the median was -2.17.
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 * 0.9037||+||0.528 * 1.0408||+||0.404 * 8.067||+||0.892 * 1.5687||+||0.115 * 1.1994|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9029||+||4.679 * -0.0606||-||0.327 * 0.6643|
|This Year (Dec13) TTM:||Last Year (Dec12) TTM:|
|Accounts Receivable was $87.1 Mil.|
Revenue was 242.881 + 236.346 + 184.573 + 135.129 = $798.9 Mil.
Gross Profit was 221.96 + 216.312 + 167.352 + 118.94 = $724.6 Mil.
Total Current Assets was $396.8 Mil.
Total Assets was $736.4 Mil.
Property, Plant and Equipment(Net PPE) was $31.7 Mil.
Depreciation, Depletion and Amortization(DDA) was $14.2 Mil.
Selling, General & Admin. Expense(SGA) was $209.3 Mil.
Total Current Liabilities was $161.2 Mil.
Long-Term Debt was $14.0 Mil.
Net Income was 89.983 + 94.441 + 69.123 + 39.064 = $292.6 Mil.
Non Operating Income was -0.06 + 0 + 0 + -0.488 = $-0.5 Mil.
Cash Flow from Operations was 105.931 + 108.856 + 81.539 + 41.452 = $337.8 Mil.
|Accounts Receivable was $61.4 Mil.
Revenue was 160.532 + 140.339 + 112.452 + 95.968 = $509.3 Mil.
Gross Profit was 151.376 + 132.84 + 106.073 + 90.448 = $480.7 Mil.
Total Current Assets was $237.3 Mil.
Total Assets was $252.4 Mil.
Property, Plant and Equipment(Net PPE) was $2.1 Mil.
Depreciation, Depletion and Amortization(DDA) was $1.2 Mil.
Selling, General & Admin. Expense(SGA) was $147.7 Mil.
Total Current Liabilities was $90.4 Mil.
Long-Term Debt was $0.0 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)|
|=||(87.069 / 798.929)||/||(61.417 / 509.291)|
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)|
|=||(216.312 / 509.291)||/||(221.96 / 798.929)|
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 - (396.776 + 31.733) / 736.354)||/||(1 - (237.276 + 2.073) / 252.431)|
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))|
|=||(1.219 / (1.219 + 2.073))||/||(14.172 / (14.172 + 31.733))|
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)|
|=||(209.262 / 798.929)||/||(147.736 / 509.291)|
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)|
|=||((13.998 + 161.172) / 736.354)||/||((0 + 90.399) / 252.431)|
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|
|=||(292.611 - -0.548||-||337.778)||/||736.354|
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 0.68 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
Questcor Pharmaceuticals Inc Annual Data
Questcor Pharmaceuticals Inc Quarterly Data