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Shire PLC (NAS:SHPG)
Beneish M-Score
-3.01 (As of Today)

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.

Shire PLC has a M-score of -3.06 suggests that the company is not a manipulator.

SHPG' s 10-Year Beneish M-Score Range
Min: -4.37   Max: -2.24
Current: -3.01

-4.37
-2.24

During the past 13 years, the highest Beneish M-Score of Shire PLC was -2.24. The lowest was -4.37. And the median was -2.78.


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 Shire PLC 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 * 0.8824+0.528 * 1.0319+0.404 * 1.4786+0.892 * 1.2205+0.115 * 0.8152
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0052+4.679 * -0.181-0.327 * 1.0205
=-3.06

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

This Year (Dec14) TTM:Last Year (Dec13) TTM:
Accounts Receivable was $1,035 Mil.
Revenue was 1576.1 + 1597.1 + 1502.1 + 1346.8 = $6,022 Mil.
Gross Profit was 1357.6 + 1342.8 + 1225.1 + 1117.3 = $5,043 Mil.
Total Current Assets was $5,183 Mil.
Total Assets was $13,632 Mil.
Property, Plant and Equipment(Net PPE) was $838 Mil.
Depreciation, Depletion and Amortization(DDA) was $407 Mil.
Selling, General & Admin. Expense(SGA) was $2,026 Mil.
Total Current Liabilities was $3,022 Mil.
Long-Term Debt was $0 Mil.
Net Income was 2172.3 + 479.7 + 523.1 + 230.4 = $3,406 Mil.
Non Operating Income was 1629.5 + 6.8 + 3.3 + 4.7 = $1,644 Mil.
Cash Flow from Operations was 2554.9 + 593.4 + 834 + 246.1 = $4,228 Mil.
Accounts Receivable was $961 Mil.
Revenue was 1326 + 1212.7 + 1252.2 + 1143.4 = $4,934 Mil.
Gross Profit was 1147.4 + 1032.2 + 1087.9 + 996 = $4,264 Mil.
Total Current Assets was $4,288 Mil.
Total Assets was $8,323 Mil.
Property, Plant and Equipment(Net PPE) was $892 Mil.
Depreciation, Depletion and Amortization(DDA) was $324 Mil.
Selling, General & Admin. Expense(SGA) was $1,651 Mil.
Total Current Liabilities was $1,808 Mil.
Long-Term Debt was $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)
=(1035.1 / 6022.1) / (961.2 / 4934.3)
=0.17188356 / 0.19479967
=0.8824

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)
=(1342.8 / 4934.3) / (1357.6 / 6022.1)
=0.86405367 / 0.83738231
=1.0319

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 - (5183.1 + 837.5) / 13632.1) / (1 - (4288.3 + 891.8) / 8323)
=0.55835124 / 0.37761624
=1.4786

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
=6022.1 / 4934.3
=1.2205

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))
=(324.4 / (324.4 + 891.8)) / (407.3 / (407.3 + 837.5))
=0.26673245 / 0.32720116
=0.8152

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)
=(2025.8 / 6022.1) / (1651.3 / 4934.3)
=0.33639428 / 0.3346574
=1.0052

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 + 3021.9) / 13632.1) / ((0 + 1807.9) / 8323)
=0.22167531 / 0.21721735
=1.0205

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
=(3405.5 - 1644.3 - 4228.4) / 13632.1
=-0.181

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.

Shire PLC has a M-score of -3.06 suggests that the company will not 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.

Shire PLC Annual Data

Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14
DSRI 1.26350.83871.04750.72121.521.00430.99350.91851.07010.8824
GMI 1.03421.00360.98921.00760.99311.00521.00510.99021.00761.0319
AQI 1.73320.881.42221.14470.85750.95951.03090.84760.87741.4786
SGI 1.17321.12331.35611.24050.99521.15411.22831.06191.08991.2205
DEPI 1.3580.89360.82191.15771.01991.17140.95890.98450.9150.8152
SGAI 1.14071.14040.94320.95910.94810.98510.93421.04740.77781.0052
LVGI 2.28371.10181.38130.9040.93710.95120.89120.94460.57891.0205
TATA -0.3637-0.0994-0.4751-0.1554-0.0424-0.0696-0.0355-0.0868-0.0954-0.181
M-score -3.87-3.10-4.31-3.13-2.23-2.64-2.39-2.96-2.66-3.06

Shire PLC Quarterly Data

Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14Dec14Mar15
DSRI 0.91850.95241.13831.19311.07011.08040.96890.83890.88240.8527
GMI 0.99020.98670.99110.99071.00761.0221.03761.04071.03191.0143
AQI 0.84760.90110.97180.95170.87741.55461.47491.53381.47861.198
SGI 1.06191.00810.9861.00721.08991.1421.18581.23981.22051.1997
DEPI 0.98451.00811.04081.04560.9150.87540.79390.74790.81520.8171
SGAI 1.04740.98730.91880.88490.77780.80440.86140.90411.00521.0369
LVGI 0.94460.94550.92310.93970.57890.86220.78670.72881.02050.9046
TATA -0.0868-0.0935-0.061-0.0684-0.0954-0.066-0.0912-0.0866-0.181-0.1472
M-score -2.96-2.98-2.62-2.60-2.66-2.29-2.49-2.51-3.06-3.03
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