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Shire PLC (NAS:SHPG)
Beneish M-Score
-1.45 (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 -1.58 signals that the company is a manipulator.

SHPG' s Beneish M-Score Range Over the Past 10 Years
Min: -4.99   Max: -1.45
Current: -1.45

-4.99
-1.45

During the past 13 years, the highest Beneish M-Score of Shire PLC was -1.45. The lowest was -4.99. 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 * 1.8177+0.528 * 1.0701+0.404 * 0.9597+0.892 * 1.2074+0.115 * 2.7042
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9242+4.679 * -0.0186-0.327 * 1.5455
=-1.58

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

This Year (Jun16) TTM:Last Year (Jun15) TTM:
Accounts Receivable was $2,412 Mil.
Revenue was 2429.1 + 1709.3 + 1715.7 + 1655 = $7,509 Mil.
Gross Profit was 1651 + 1460.7 + 1465.2 + 1392.3 = $5,969 Mil.
Total Current Assets was $9,658 Mil.
Total Assets was $70,721 Mil.
Property, Plant and Equipment(Net PPE) was $6,596 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,069 Mil.
Selling, General & Admin. Expense(SGA) was $2,492 Mil.
Total Current Liabilities was $6,855 Mil.
Long-Term Debt was $21,312 Mil.
Net Income was -162.1 + 419 + 280.6 + 452.8 = $990 Mil.
Non Operating Income was 6 + -8.5 + -8.2 + 9.6 = $-1 Mil.
Cash Flow from Operations was 590.9 + 389.5 + 761.8 + 561.3 = $2,304 Mil.
Accounts Receivable was $1,099 Mil.
Revenue was 1557.6 + 1488.4 + 1576.1 + 1597.1 = $6,219 Mil.
Gross Profit was 1329.6 + 1260.6 + 1357.6 + 1342.8 = $5,291 Mil.
Total Current Assets was $2,547 Mil.
Total Assets was $17,031 Mil.
Property, Plant and Equipment(Net PPE) was $817 Mil.
Depreciation, Depletion and Amortization(DDA) was $494 Mil.
Selling, General & Admin. Expense(SGA) was $2,233 Mil.
Total Current Liabilities was $4,315 Mil.
Long-Term Debt was $74 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)
=(2412.4 / 7509.1) / (1099.2 / 6219.2)
=0.32126353 / 0.17674299
=1.8177

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)
=(5290.6 / 6219.2) / (5969.2 / 7509.1)
=0.85068819 / 0.79492882
=1.0701

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 - (9658.1 + 6596.3) / 70720.5) / (1 - (2547 + 816.7) / 17030.5)
=0.77016 / 0.80248965
=0.9597

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
=7509.1 / 6219.2
=1.2074

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))
=(494.3 / (494.3 + 816.7)) / (1068.7 / (1068.7 + 6596.3))
=0.37704043 / 0.13942596
=2.7042

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)
=(2492.1 / 7509.1) / (2233.2 / 6219.2)
=0.33187732 / 0.35908155
=0.9242

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)
=((21312.1 + 6854.8) / 70720.5) / ((73.9 + 4315.1) / 17030.5)
=0.3982848 / 0.2577141
=1.5455

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
=(990.3 - -1.1 - 2303.5) / 70720.5
=-0.0186

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 -1.58 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.

Shire PLC Annual Data

Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15
DSRI 0.83871.04750.72121.521.00430.99350.88831.10640.88241.0891
GMI 1.00360.98921.00760.99311.00521.00510.99990.99781.03190.9863
AQI 0.881.42221.14470.85750.95951.03090.84760.87741.47861.4585
SGI 1.12331.35611.24050.99521.15411.22831.0981.05411.22051.0655
DEPI 0.89360.82191.15771.01991.17140.95890.98450.9150.81520.7524
SGAI 1.14040.94320.95910.94810.98510.93421.09930.74111.00521.0846
LVGI 1.10181.38130.9040.93710.95120.89120.94460.57891.02051.0255
TATA -0.0791-0.4452-0.1554-0.0424-0.0696-0.0355-0.0868-0.0954-0.181-0.0625
M-score -3.00-4.17-3.13-2.23-2.64-2.39-2.96-2.66-3.06-2.51

Shire PLC Quarterly Data

Mar14Jun14Sep14Dec14Mar15Jun15Sep15Dec15Mar16Jun16
DSRI 1.12591.01810.88820.88240.84960.89871.09181.08911.0921.8177
GMI 1.00911.02091.01851.03191.01570.98960.98950.98630.98891.0701
AQI 1.55461.47491.53381.47861.1981.15551.17861.45851.06770.9597
SGI 1.09591.12851.17091.22051.2041.16321.09981.06551.07691.2074
DEPI 0.87540.79390.74790.81520.81710.81470.78230.75240.76482.7042
SGAI 0.73030.74530.75181.00521.06271.14181.17841.08461.07970.9242
LVGI 0.86220.78670.72881.02050.90460.95341.00491.02551.3381.5455
TATA -0.066-0.0912-0.0866-0.181-0.1472-0.1514-0.1476-0.0625-0.0351-0.0186
M-score -2.28-2.48-2.51-3.06-3.04-3.11-2.99-2.51-2.62-1.58
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