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Shire PLC (NAS:SHPG)
Beneish M-Score
-1.62 (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 -1.85 signals that the company is a manipulator.

SHPG' s Beneish M-Score Range Over the Past 10 Years
Min: -4.99   Max: -1.46
Current: -1.62

-4.99
-1.46

During the past 13 years, the highest Beneish M-Score of Shire PLC was -1.46. The lowest was -4.99. And the median was -2.59.


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 * 1.3706+0.528 * 1.2581+0.404 * 0.9742+0.892 * 1.4826+0.115 * 1.7133
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0495+4.679 * -0.03-0.327 * 1.6219
=-1.85

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

This Year (Sep16) TTM:Last Year (Sep15) TTM:
Accounts Receivable was $2,633 Mil.
Revenue was 3452.1 + 2429.1 + 1709.3 + 1715.7 = $9,306 Mil.
Gross Profit was 1715.9 + 1651 + 1460.7 + 1465.2 = $6,293 Mil.
Total Current Assets was $8,905 Mil.
Total Assets was $69,751 Mil.
Property, Plant and Equipment(Net PPE) was $6,528 Mil.
Depreciation, Depletion and Amortization(DDA) was $2,132 Mil.
Selling, General & Admin. Expense(SGA) was $3,145 Mil.
Total Current Liabilities was $7,111 Mil.
Long-Term Debt was $20,989 Mil.
Net Income was -386.8 + -162.1 + 419 + 280.6 = $151 Mil.
Non Operating Income was -13.7 + 6 + -8.5 + -8.2 = $-24 Mil.
Cash Flow from Operations was 525.6 + 590.9 + 389.5 + 761.8 = $2,268 Mil.
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 $581 Mil.
Selling, General & Admin. Expense(SGA) was $2,021 Mil.
Total Current Liabilities was $4,265 Mil.
Long-Term Debt was $71 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)
=(2633.4 / 9306.2) / (1296 / 6277.1)
=0.28297264 / 0.20646477
=1.3706

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)
=(5340.1 / 6277.1) / (6292.8 / 9306.2)
=0.85072725 / 0.67619437
=1.2581

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 - (8904.5 + 6527.7) / 69751.3) / (1 - (2706.1 + 795.9) / 17453.6)
=0.77875394 / 0.79935371
=0.9742

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
=9306.2 / 6277.1
=1.4826

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))
=(580.6 / (580.6 + 795.9)) / (2131.9 / (2131.9 + 6527.7))
=0.42179441 / 0.2461892
=1.7133

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)
=(3145 / 9306.2) / (2021.3 / 6277.1)
=0.33794675 / 0.32201176
=1.0495

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)
=((20988.9 + 7110.9) / 69751.3) / ((70.7 + 4264.5) / 17453.6)
=0.40285701 / 0.24838429
=1.6219

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
=(150.7 - -24.4 - 2267.8) / 69751.3
=-0.03

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 -1.85 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 local exchange's currency.

Shire PLC Annual Data

Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15
DSRI 0.83871.04750.72121.521.00431.01860.89581.07010.88241.0891
GMI 1.00360.98921.00760.99311.00520.99910.99621.00761.03190.9863
AQI 0.881.42221.14470.85750.95951.03090.84760.87741.47861.4585
SGI 1.12331.35611.24050.99521.15411.19791.08881.08991.22051.0655
DEPI 0.89360.82191.15771.01991.17140.95890.98450.9150.81520.7524
SGAI 1.14040.94320.95910.94810.98510.91651.06770.77781.00521.0846
LVGI 1.10181.38130.9040.93710.95120.89120.94460.57891.02051.0255
TATA -0.0791-0.4452-0.1554-0.0424-0.0696-0.0356-0.0868-0.0954-0.181-0.0625
M-score -3.00-4.17-3.13-2.23-2.64-2.40-2.96-2.66-3.06-2.51

Shire PLC Quarterly Data

Jun14Sep14Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16
DSRI 0.96890.83890.88240.85270.90561.10421.08911.0921.81771.3706
GMI 1.03761.04071.03191.01430.98670.98420.98630.98891.07011.2581
AQI 1.47491.53381.47861.1981.15551.17861.45851.06770.95970.9742
SGI 1.18581.23981.22051.19971.15441.08751.06551.07691.20741.4826
DEPI 0.79390.74790.81520.81150.79850.76410.75240.7672.79591.7133
SGAI 0.86140.90411.00521.03691.02520.97681.12551.11871.06851.0495
LVGI 0.78670.72881.02050.90460.95341.00491.02551.3381.54551.6219
TATA -0.0912-0.0866-0.181-0.1472-0.1514-0.1476-0.0625-0.0351-0.0186-0.03
M-score -2.49-2.51-3.06-3.04-3.09-2.96-2.51-2.63-1.59-1.85
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