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Shire PLC (NAS:SHPG)
Beneish M-Score
-2.61 (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 -2.49 suggests that the company is not a manipulator.

SHPG' s 10-Year Beneish M-Score Range
Min: -4.98   Max: -1.86
Current: -2.61

-4.98
-1.86

During the past 13 years, the highest Beneish M-Score of Shire PLC was -1.86. The lowest was -4.98. And the median was -2.61.


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 * 1.0093+0.528 * 1.0245+0.404 * 1.4749+0.892 * 1.1383+0.115 * 0.7939
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.7756+4.679 * -0.0912-0.327 * 0.7867
=-2.49

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

This Year (Jun14) TTM:Last Year (Jun13) TTM:
Accounts Receivable was $1,052 Mil.
Revenue was 1502.1 + 1346.8 + 1261.3 + 1236.6 = $5,347 Mil.
Gross Profit was 1225.1 + 1117.3 + 1119.2 + 1039.5 = $4,501 Mil.
Total Current Assets was $2,613 Mil.
Total Assets was $11,344 Mil.
Property, Plant and Equipment(Net PPE) was $853 Mil.
Depreciation, Depletion and Amortization(DDA) was $378 Mil.
Selling, General & Admin. Expense(SGA) was $1,682 Mil.
Total Current Liabilities was $2,217 Mil.
Long-Term Debt was $850 Mil.
Net Income was 523.1 + 230.4 + 64 + 278.2 = $1,096 Mil.
Non Operating Income was 3.3 + 4.7 + -2 + 0.6 = $7 Mil.
Cash Flow from Operations was 834 + 246.1 + 610.3 + 433.7 = $2,124 Mil.
Accounts Receivable was $915 Mil.
Revenue was 1252.2 + 1143.4 + 1201.2 + 1100.4 = $4,697 Mil.
Gross Profit was 1087.9 + 996 + 1034.6 + 932.5 = $4,051 Mil.
Total Current Assets was $3,229 Mil.
Total Assets was $7,903 Mil.
Property, Plant and Equipment(Net PPE) was $953 Mil.
Depreciation, Depletion and Amortization(DDA) was $307 Mil.
Selling, General & Admin. Expense(SGA) was $1,905 Mil.
Total Current Liabilities was $2,716 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)
=(1051.5 / 5346.8) / (915.2 / 4697.2)
=0.19665968 / 0.19483948
=1.0093

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)
=(1117.3 / 4697.2) / (1225.1 / 5346.8)
=0.86242868 / 0.84183063
=1.0245

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 - (2613 + 852.5) / 11344.4) / (1 - (3228.5 + 953.1) / 7902.9)
=0.69451888 / 0.47087778
=1.4749

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
=5346.8 / 4697.2
=1.1383

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))
=(307.4 / (307.4 + 953.1)) / (378 / (378 + 852.5))
=0.24387148 / 0.3071922
=0.7939

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)
=(1681.5 / 5346.8) / (1904.7 / 4697.2)
=0.31448717 / 0.40549689
=0.7756

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)
=((850 + 2216.6) / 11344.4) / ((0 + 2715.5) / 7902.9)
=0.27031839 / 0.34360804
=0.7867

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
=(1095.7 - 6.6 - 2124.1) / 11344.4
=-0.0912

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 -2.49 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

Dec04Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13
DSRI 0.93631.26360.93771.00050.67531.521.00430.99351.05160.9346
GMI 0.9691.03431.00470.98921.00760.99311.00521.00510.99990.9978
AQI 0.98721.85570.82191.42221.14470.85750.95951.03090.84760.8774
SGI 1.10191.17321.12331.35611.24050.99521.15411.22831.0981.0541
DEPI 0.65571.35370.8970.82191.15771.01991.17140.95890.98450.915
SGAI 1.01131.1641.17970.94320.95910.94810.98510.93421.09930.7411
LVGI 0.6512.16811.16051.38130.9040.93710.95120.89120.94460.5789
TATA -0.0563-0.0402-0.0994-0.4751-0.1554-0.0424-0.0696-0.0355-0.0868-0.0954
M-score -2.66-2.28-3.06-4.36-3.17-2.23-2.64-2.39-2.81-2.82

Shire PLC Quarterly Data

Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14
DSRI 0.95210.85250.89631.05161.11091.10111.36910.94240.93371.0093
GMI 1.00621.00460.99710.99990.99651.00081.00340.99441.00871.0245
AQI 1.0180.83120.84360.84760.90110.97180.95170.87741.55461.4749
SGI 1.23051.19981.14061.0981.04251.01941.04571.04541.09541.1383
DEPI 0.91260.87520.92320.98451.00811.04081.04560.9150.87540.7939
SGAI 0.95730.96640.97371.09931.04080.97360.95830.70440.72610.7756
LVGI 0.91590.91890.88520.94460.94550.92310.93970.57890.86220.7867
TATA -0.0381-0.0574-0.0639-0.0868-0.0935-0.061-0.0683-0.0954-0.0661-0.0912
M-score -2.46-2.75-2.78-2.81-2.81-2.63-2.40-2.81-2.46-2.49
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