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Shire PLC (NAS:SHPG)
Beneish M-Score
-2.66 (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 -2.66 suggests that the company is not a manipulator.

SHPG' s 10-Year Beneish M-Score Range
Min: -4.35   Max: -2.13
Current: -2.66

-4.35
-2.13

During the past 13 years, the highest Beneish M-Score of Shire PLC was -2.13. The lowest was -4.35. And the median was -2.75.


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 * 1.0701+0.528 * 1.0076+0.404 * 0.8774+0.892 * 1.0899+0.115 * 0.915
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.7778+4.679 * -0.0954-0.327 * 0.5789
=-2.66

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

This Year (Dec13) TTM:Last Year (Dec12) TTM:
Accounts Receivable was $961 Mil.
Revenue was 1261.3 + 1236.6 + 1274.5 + 1161.9 = $4,934 Mil.
Gross Profit was 1119.2 + 1039.5 + 1098.8 + 1006 = $4,264 Mil.
Total Current Assets was $4,288 Mil.
Total Assets was $8,323 Mil.
Property, Plant and Equipment(Net PPE) was $892 Mil.
Depreciation, Depletion and Amortization(DDA) was $324 Mil.
Selling, General & Admin. Expense(SGA) was $1,651 Mil.
Total Current Liabilities was $1,808 Mil.
Long-Term Debt was $0 Mil.
Net Income was 64 + 278.2 + 258.1 + 64.8 = $665 Mil.
Non Operating Income was -2 + 0.6 + -1.4 + -1.1 = $-4 Mil.
Cash Flow from Operations was 610.3 + 433.7 + 258.6 + 160.4 = $1,463 Mil.
Accounts Receivable was $824 Mil.
Revenue was 1047.4 + 1100.4 + 1207.8 + 1171.8 = $4,527 Mil.
Gross Profit was 940.4 + 932.5 + 1055.3 + 1013.4 = $3,942 Mil.
Total Current Assets was $3,212 Mil.
Total Assets was $7,317 Mil.
Property, Plant and Equipment(Net PPE) was $956 Mil.
Depreciation, Depletion and Amortization(DDA) was $309 Mil.
Selling, General & Admin. Expense(SGA) was $1,948 Mil.
Total Current Liabilities was $1,646 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)
=(961.2 / 4934.3) / (824.2 / 4527.4)
=0.19479967 / 0.18204709
=1.0701

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)
=(1039.5 / 4527.4) / (1119.2 / 4934.3)
=0.87061006 / 0.86405367
=1.0076

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 - (4288.3 + 891.8) / 8323) / (1 - (3212.1 + 955.8) / 7317.2)
=0.37761624 / 0.43039687
=0.8774

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
=4934.3 / 4527.4
=1.0899

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))
=(308.6 / (308.6 + 955.8)) / (324.4 / (324.4 + 891.8))
=0.24406833 / 0.26673245
=0.915

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)
=(1651.3 / 4934.3) / (1948 / 4527.4)
=0.3346574 / 0.43026903
=0.7778

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)
=((0 + 1807.9) / 8323) / ((1100 + 1645.6) / 7317.2)
=0.21721735 / 0.3752255
=0.5789

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
=(665.1 - -3.9 - 1463) / 8323
=-0.0954

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 -2.66 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 1.01651.45890.81221.00050.67531.521.00431.01860.89581.0701
GMI 0.98541.03421.00360.98921.00760.99311.00520.99910.99621.0076
AQI 0.89481.73320.881.42221.14470.85750.95951.03090.84760.8774
SGI 1.12521.17321.12331.35611.24050.99521.15411.19791.08881.0899
DEPI 0.90561.3580.89360.82191.15771.01991.17140.95890.98450.915
SGAI 1.18311.14071.14040.94320.95910.94810.98510.91651.06770.7778
LVGI 0.65342.28371.10181.38130.9040.93710.95120.89120.94460.5789
TATA -0.0906-0.3637-0.0994-0.4751-0.1554-0.0424-0.0696-0.0356-0.0868-0.0954
M-score -2.76-3.69-3.12-4.36-3.17-2.23-2.64-2.40-2.96-2.66

Shire PLC Quarterly Data

Sep11Dec11Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13
DSRI 0.9911.01860.97510.87240.91720.89581.11721.10241.371.0701
GMI 1.0140.99911.00050.99890.99150.99620.9941.00031.00321.0076
AQI 1.32341.03091.0180.83120.84360.84760.90110.97180.95170.8774
SGI 1.18041.19791.20141.17241.11461.08881.03671.01811.04511.0899
DEPI 1.04210.95890.91260.87520.92320.98451.00811.04081.04560.915
SGAI 0.98470.91650.94030.950.95681.06771.02660.97680.96120.7778
LVGI 0.91310.89120.91590.91890.88520.94460.94550.92310.93970.5789
TATA -0.0407-0.0356-0.0382-0.0575-0.064-0.0868-0.0935-0.061-0.0684-0.0954
M-score -2.34-2.40-2.47-2.76-2.78-2.96-2.81-2.63-2.41-2.66
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