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Shire PLC (NAS:SHPG)
Beneish M-Score
-2.46 (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 -2.46 suggests that the company is not a manipulator.

SHPG' s 10-Year Beneish M-Score Range
Min: -4.91   Max: -2.06
Current: -2.46

-4.91
-2.06

During the past 13 years, the highest Beneish M-Score of Shire PLC was -2.06. The lowest was -4.91. And the median was -2.66.


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 * 0.8989+0.528 * 1.0207+0.404 * 1.5546+0.892 * 1.1379+0.115 * 0.8754
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.7848+4.679 * -0.066-0.327 * 0.8622
=-2.46

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

This Year (Mar14) TTM:Last Year (Mar13) TTM:
Accounts Receivable was $1,091 Mil.
Revenue was 1346.8 + 1261.3 + 1236.6 + 1274.5 = $5,119 Mil.
Gross Profit was 1117.3 + 1119.2 + 1039.5 + 1098.8 = $4,375 Mil.
Total Current Assets was $2,641 Mil.
Total Assets was $10,900 Mil.
Property, Plant and Equipment(Net PPE) was $884 Mil.
Depreciation, Depletion and Amortization(DDA) was $346 Mil.
Selling, General & Admin. Expense(SGA) was $1,643 Mil.
Total Current Liabilities was $2,520 Mil.
Long-Term Debt was $850 Mil.
Net Income was 230.4 + 64 + 278.2 + 258.1 = $831 Mil.
Non Operating Income was 4.7 + -2 + 0.6 + -1.4 = $2 Mil.
Cash Flow from Operations was 246.1 + 610.3 + 433.7 + 258.6 = $1,549 Mil.
Accounts Receivable was $1,067 Mil.
Revenue was 1143.4 + 1047.4 + 1100.4 + 1207.8 = $4,499 Mil.
Gross Profit was 996 + 940.4 + 932.5 + 1055.3 = $3,924 Mil.
Total Current Assets was $3,333 Mil.
Total Assets was $7,586 Mil.
Property, Plant and Equipment(Net PPE) was $951 Mil.
Depreciation, Depletion and Amortization(DDA) was $311 Mil.
Selling, General & Admin. Expense(SGA) was $1,840 Mil.
Total Current Liabilities was $1,620 Mil.
Long-Term Debt was $1,100 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)
=(1091.2 / 5119.2) / (1066.9 / 4499)
=0.21315831 / 0.23714159
=0.8989

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)
=(1119.2 / 4499) / (1117.3 / 5119.2)
=0.87223828 / 0.85458665
=1.0207

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 - (2641.2 + 884) / 10900.2) / (1 - (3333.3 + 951) / 7585.6)
=0.67659309 / 0.43520618
=1.5546

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
=5119.2 / 4499
=1.1379

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))
=(310.6 / (310.6 + 951)) / (345.9 / (345.9 + 884))
=0.24619531 / 0.28124238
=0.8754

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)
=(1642.9 / 5119.2) / (1839.7 / 4499)
=0.32092905 / 0.40891309
=0.7848

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 + 2519.6) / 10900.2) / ((1100 + 1619.7) / 7585.6)
=0.30913194 / 0.35853459
=0.8622

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
=(830.7 - 1.9 - 1548.7) / 10900.2
=-0.066

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 -2.46 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 1.01651.45890.81221.00050.67531.521.00431.07220.8511.0701
GMI 0.98541.03421.00360.98921.00760.99311.00521.00510.99021.0076
AQI 0.89481.73320.881.42221.14470.85750.95951.03090.84760.8774
SGI 1.12521.17321.12331.35611.24050.99521.15411.22831.06191.0899
DEPI 0.90561.3580.89360.82191.15771.01991.17140.95890.98450.915
SGAI 1.18311.14071.14040.94320.95910.94810.98510.93421.04740.7778
LVGI 0.65342.28371.10181.38130.9040.93710.95120.89120.94460.5789
TATA -0.0906-0.3637-0.0994-0.4751-0.1554-0.0424-0.0696-0.0355-0.0868-0.0954
M-score -2.76-3.69-3.12-4.36-3.17-2.23-2.64-2.32-3.03-2.66

Shire PLC Quarterly Data

Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14
DSRI 0.95210.85250.89630.8511.14891.13281.40741.07410.89890.9811
GMI 1.00621.00460.99710.99020.98670.99320.99611.00621.02071.0323
AQI 1.0180.83120.84360.84760.90110.97180.95170.87741.55461.4749
SGI 1.23051.19981.14061.06191.00810.99081.01721.08581.13791.1711
DEPI 0.91260.87520.92320.98451.00811.04081.04560.9150.87540.7939
SGAI 0.95730.96640.97371.04740.98730.93940.92390.75850.78480.8038
LVGI 0.91590.91890.88520.94460.94550.92310.93970.57890.86220.7867
TATA -0.0381-0.0574-0.0639-0.0868-0.0935-0.061-0.0684-0.0954-0.066-0.0912
M-score -2.46-2.75-2.78-3.03-2.80-2.63-2.39-2.66-2.46-2.48
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