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Shire PLC (NAS:SHPG)
Beneish M-Score
-3.05 (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 -2.98 suggests that the company is not a manipulator.

SHPG' s Beneish M-Score Range Over the Past 10 Years
Min: -5   Max: -2.21
Current: -3.05

-5
-2.21

During the past 13 years, the highest Beneish M-Score of Shire PLC was -2.21. The lowest was -5.00. 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 * 1.1042+0.528 * 0.9842+0.404 * 1.1786+0.892 * 1.0875+0.115 * 0.7823
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.1044+4.679 * -0.1476-0.327 * 1.0049
=-2.98

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

This Year (Sep15) TTM:Last Year (Sep14) TTM:
Accounts Receivable was $1,296 Mil.
Revenue was 1655 + 1557.6 + 1488.4 + 1576.1 = $6,277 Mil.
Gross Profit was 1392.3 + 1329.6 + 1260.6 + 1357.6 = $5,340 Mil.
Total Current Assets was $2,706 Mil.
Total Assets was $17,454 Mil.
Property, Plant and Equipment(Net PPE) was $796 Mil.
Depreciation, Depletion and Amortization(DDA) was $558 Mil.
Selling, General & Admin. Expense(SGA) was $2,285 Mil.
Total Current Liabilities was $4,265 Mil.
Long-Term Debt was $71 Mil.
Net Income was 452.8 + 159.6 + 410.4 + 2172.3 = $3,195 Mil.
Non Operating Income was 9.6 + -2 + 4.3 + 1629.5 = $1,641 Mil.
Cash Flow from Operations was 561.3 + 452.3 + 561.6 + 2554.9 = $4,130 Mil.
Accounts Receivable was $1,079 Mil.
Revenue was 1597.1 + 1502.1 + 1346.8 + 1326 = $5,772 Mil.
Gross Profit was 1342.8 + 1225.1 + 1117.3 + 1147.4 = $4,833 Mil.
Total Current Assets was $2,868 Mil.
Total Assets was $11,541 Mil.
Property, Plant and Equipment(Net PPE) was $846 Mil.
Depreciation, Depletion and Amortization(DDA) was $402 Mil.
Selling, General & Admin. Expense(SGA) was $1,903 Mil.
Total Current Liabilities was $2,002 Mil.
Long-Term Debt was $850 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)
=(1296 / 6277.1) / (1079.3 / 5772)
=0.20646477 / 0.18698891
=1.1042

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)
=(1329.6 / 5772) / (1392.3 / 6277.1)
=0.83724879 / 0.85072725
=0.9842

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 - (2706.1 + 795.9) / 17453.6) / (1 - (2868.1 + 845.6) / 11540.5)
=0.79935371 / 0.67820285
=1.1786

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
=6277.1 / 5772
=1.0875

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))
=(402.1 / (402.1 + 845.6)) / (557.6 / (557.6 + 795.9))
=0.32227298 / 0.41196897
=0.7823

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)
=(2285.3 / 6277.1) / (1902.7 / 5772)
=0.3640694 / 0.3296431
=1.1044

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)
=((70.7 + 4264.5) / 17453.6) / ((850 + 2002.4) / 11540.5)
=0.24838429 / 0.24716433
=1.0049

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
=(3195.1 - 1641.4 - 4130.1) / 17453.6
=-0.1476

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 -2.98 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

Jun13Sep13Dec13Mar14Jun14Sep14Dec14Mar15Jun15Sep15
DSRI 1.13831.19311.07011.08040.96890.83890.88240.85270.90561.1042
GMI 0.99110.99071.00761.0221.03761.04071.03191.01430.98670.9842
AQI 0.97180.95170.87741.55461.47491.53381.47861.1981.15551.1786
SGI 0.9861.00721.08991.1421.18581.23981.22051.19971.15441.0875
DEPI 1.04081.04560.9150.87890.79390.74790.81520.81150.81470.7823
SGAI 0.91880.88490.77780.80440.86140.90411.00521.03691.08921.1044
LVGI 0.92310.93970.57890.86220.78670.72881.02050.90460.95341.0049
TATA -0.061-0.0684-0.0954-0.066-0.0912-0.0866-0.181-0.1472-0.1514-0.1476
M-score -2.62-2.60-2.66-2.29-2.49-2.51-3.06-3.04-3.10-2.98
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