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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.
Questcor Pharmaceuticals Inc has a M-score of -1.97 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 -5.42. And the median was -2.26.
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 * 1.0108||+||0.528 * 1.0196||+||0.404 * 1.8422||+||0.892 * 1.6244||+||0.115 * 0.2255|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.8433||+||4.679 * -0.0897||-||0.327 * 0.7608|
|This Year (Mar14) TTM:||Last Year (Mar13) TTM:|
|Accounts Receivable was $97.3 Mil.|
Revenue was 227.104 + 242.881 + 236.346 + 184.573 = $890.9 Mil.
Gross Profit was 205.694 + 221.96 + 216.312 + 167.352 = $811.3 Mil.
Total Current Assets was $494.5 Mil.
Total Assets was $828.4 Mil.
Property, Plant and Equipment(Net PPE) was $31.3 Mil.
Depreciation, Depletion and Amortization(DDA) was $16.9 Mil.
Selling, General & Admin. Expense(SGA) was $230.9 Mil.
Total Current Liabilities was $188.0 Mil.
Long-Term Debt was $13.1 Mil.
Net Income was 74.31 + 89.983 + 94.441 + 69.123 = $327.9 Mil.
Non Operating Income was -0.154 + -0.06 + 0 + 0 = $-0.2 Mil.
Cash Flow from Operations was 106.074 + 105.931 + 108.856 + 81.539 = $402.4 Mil.
|Accounts Receivable was $59.3 Mil.
Revenue was 135.129 + 160.532 + 140.339 + 112.452 = $548.5 Mil.
Gross Profit was 118.94 + 151.376 + 132.84 + 106.073 = $509.2 Mil.
Total Current Assets was $241.4 Mil.
Total Assets was $345.8 Mil.
Property, Plant and Equipment(Net PPE) was $35.7 Mil.
Depreciation, Depletion and Amortization(DDA) was $3.1 Mil.
Selling, General & Admin. Expense(SGA) was $168.6 Mil.
Total Current Liabilities was $94.3 Mil.
Long-Term Debt was $16.1 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)|
|=||(97.331 / 890.904)||/||(59.278 / 548.452)|
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)|
|=||(221.96 / 548.452)||/||(205.694 / 890.904)|
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 - (494.48 + 31.25) / 828.396)||/||(1 - (241.437 + 35.742) / 345.753)|
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))|
|=||(3.066 / (3.066 + 35.742))||/||(16.858 / (16.858 + 31.25))|
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)|
|=||(230.947 / 890.904)||/||(168.587 / 548.452)|
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)|
|=||((13.124 + 188.044) / 828.396)||/||((16.062 + 94.295) / 345.753)|
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|
|=||(327.857 - -0.214||-||402.4)||/||828.396|
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 -1.97 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