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Questcor Pharmaceuticals Inc (NAS:QCOR)
Beneish M-Score
0.68 (As of Today)

Warning Sign:

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.

QCOR' s 10-Year Beneish M-Score Range
Min: -4.23   Max: 3.89
Current: 0.68

-4.23
3.89

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.


Definition

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
=0.68

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.

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

Measured as the ratio of days’ sales in receivables in year t to year t-1.

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)
=0.10898215 / 0.12059314
=0.9037

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.

GMI=GrossMargin_t-1 / GrossMargin_t
=(GrossProfit_t-1 / Revenue_t-1) / (GrossProfit_t / Revenue_t)
=(216.312 / 509.291) / (221.96 / 798.929)
=0.94393382 / 0.90691914
=1.0408

3. AQI = Asset Quality Index

AQI is the ratio of asset quality in year t to year t-1.

Asset quality is measured as the ratio of non-current assets other than plant, property and equipment to total assets.

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)
=0.41806658 / 0.05182406
=8.067

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.

SGI=Sales_t / Sales_t-1
=Revenue_t / Revenue_t-1
=798.929 / 509.291
=1.5687

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))
=0.37029162 / 0.30872454
=1.1994

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)
=0.26192816 / 0.2900817
=0.9029

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)
=0.2378883 / 0.3581137
=0.6643

8. TATA = Total Accruals to Total Assets

Total accruals calculated as the change in working capital accounts other than cash less depreciation.

TATA=(IncomefromContinuingOperations_t - CashFlowsfromOperations_t) / TotalAssets_t
=(NetIncome_t - NonOperatingIncome_t - CashFlowsfromOperations_t) / TotalAssets_t
=(292.611 - -0.548 - 337.778) / 736.354
=-0.0606

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.


Related Terms

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


Historical Data

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.

Questcor Pharmaceuticals Inc Annual Data

Dec04Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13
DSRI 0.83060.40112.72353.40670.23031.53550.57551.31840.94640.9037
GMI 0.93551.02171.01960.85650.96781.0030.98940.98680.99891.0408
AQI 0.75190.07154.77740.45861.41010.64110.71890.59561.73518.067
SGI 1.30870.76950.9033.89181.91380.92731.30361.8952.33441.5687
DEPI 0.99741.17631.94781.8370.33220.97531.40541.11160.93541.1994
SGAI 0.84871.12721.91030.26260.56941.67811.07060.94020.84980.903
LVGI 1.35641.1430.50880.85841.17921.30630.71730.97451.77260.6643
TATA -0.1025-0.1234-0.01710.3422-0.2586-0.1219-0.0098-0.0218-0.0846-0.0606
M-score -3.07-4.230.593.89-3.50-2.99-2.64-1.63-1.670.68

Questcor Pharmaceuticals Inc Quarterly Data

Sep11Dec11Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13
DSRI 1.31681.31841.52030.82090.89440.94640.72470.83860.84460.9037
GMI 0.9850.98680.99510.99590.99580.99891.01451.02561.03531.0408
AQI 0.62860.59560.61.03331.04391.73517.355413.139113.2898.067
SGI 1.53871.8952.20572.39762.46782.33441.97781.80521.68891.5687
DEPI 1.3971.11160.78950.77160.83450.93544.50472.72121.80011.1994
SGAI 1.17550.94020.82480.76110.7840.84980.98540.97460.9350.9029
LVGI 0.88420.97450.94921.72011.94521.77261.41260.76970.52860.6643
TATA -0.006-0.0218-0.0052-0.06940.0025-0.0846-0.0604-0.0586-0.073-0.0606
M-score -1.84-1.63-1.09-1.93-1.53-1.670.703.012.890.68
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