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Valeant Pharmaceuticals International Inc (NYSE:VRX)
Beneish M-Score
-2.26 (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.

Valeant Pharmaceuticals International Inc has a M-score of -2.34 suggests that the company is not a manipulator.

VRX' s Beneish M-Score Range Over the Past 10 Years
Min: -3.73   Max: 2.53
Current: -2.26

-3.73
2.53

During the past 13 years, the highest Beneish M-Score of Valeant Pharmaceuticals International Inc was 2.53. The lowest was -3.73. And the median was -2.28.


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 Valeant Pharmaceuticals International Inc 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 * 1.0201+0.528 * 0.9795+0.404 * 1.5452+0.892 * 1.2517+0.115 * 0.8461
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.1084+4.679 * -0.0606-0.327 * 0.9741
=-2.34

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

This Year (Mar16) TTM:Last Year (Mar15) TTM:
Accounts Receivable was $2,693 Mil.
Revenue was 2371.6 + 2736.4 + 2786.8 + 2732.4 = $10,627 Mil.
Gross Profit was 1741.7 + 2059.7 + 2138.6 + 2047.3 = $7,987 Mil.
Total Current Assets was $6,234 Mil.
Total Assets was $49,020 Mil.
Property, Plant and Equipment(Net PPE) was $1,466 Mil.
Depreciation, Depletion and Amortization(DDA) was $2,967 Mil.
Selling, General & Admin. Expense(SGA) was $2,939 Mil.
Total Current Liabilities was $4,597 Mil.
Long-Term Debt was $31,303 Mil.
Net Income was -373.7 + -361.9 + 49.5 + -53 = $-739 Mil.
Non Operating Income was -6.2 + -3.3 + -34 + 5.6 = $-38 Mil.
Cash Flow from Operations was 558.1 + 562.4 + 736.5 + 410.5 = $2,268 Mil.
Accounts Receivable was $2,109 Mil.
Revenue was 2170.1 + 2222.5 + 2056.2 + 2041.1 = $8,490 Mil.
Gross Profit was 1647.9 + 1651.2 + 1495.4 + 1455.5 = $6,250 Mil.
Total Current Assets was $16,192 Mil.
Total Assets was $38,566 Mil.
Property, Plant and Equipment(Net PPE) was $1,335 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,744 Mil.
Selling, General & Admin. Expense(SGA) was $2,118 Mil.
Total Current Liabilities was $3,097 Mil.
Long-Term Debt was $25,898 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)
=(2692.7 / 10627.2) / (2108.8 / 8489.9)
=0.25337812 / 0.24838926
=1.0201

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)
=(6250 / 8489.9) / (7987.3 / 10627.2)
=0.73616886 / 0.75159026
=0.9795

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 - (6233.7 + 1465.5) / 49019.9) / (1 - (16192.2 + 1334.8) / 38565.9)
=0.84293726 / 0.54553116
=1.5452

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
=10627.2 / 8489.9
=1.2517

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))
=(1743.5 / (1743.5 + 1334.8)) / (2967.3 / (2967.3 + 1465.5))
=0.56638404 / 0.66939632
=0.8461

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)
=(2938.6 / 10627.2) / (2118.1 / 8489.9)
=0.27651686 / 0.24948468
=1.1084

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)
=((31303.4 + 4597.4) / 49019.9) / ((25897.9 + 3097.1) / 38565.9)
=0.73237196 / 0.75182998
=0.9741

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
=(-739.1 - -37.9 - 2267.5) / 49019.9
=-0.0606

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.

Valeant Pharmaceuticals International Inc has a M-score of -2.34 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.

Valeant Pharmaceuticals International Inc Annual Data

Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15
DSRI 0.85121.09190.90211.14951.70170.81751.14071.33920.86451.0239
GMI 0.98421.07740.99320.98491.14390.93130.99681.05580.92110.9662
AQI 0.74621.11531.29221.29081.1230.98340.94760.99690.97071.082
SGI 1.14420.78730.89841.08351.43982.08551.43971.62681.43221.2642
DEPI 1.5041.13530.72290.69681.24260.79550.87651.09741.08870.8824
SGAI 0.90160.85771.30610.93011.34040.76260.96630.9871.0841.054
LVGI 1.09210.55850.9881.49961.29341.44061.20911.02170.96941.0656
TATA -0.1445-0.08490.0007-0.0984-0.0397-0.0403-0.0427-0.0658-0.0532-0.0484
M-score -3.23-2.71-2.62-2.81-1.63-2.04-2.26-1.88-2.52-2.48

Valeant Pharmaceuticals International Inc Quarterly Data

Dec13Mar14Jun14Sep14Dec14Mar15Jun15Sep15Dec15Mar16
DSRI 1.31420.90730.82770.65780.87060.9591.09861.16431.01881.0201
GMI 1.0771.09271.0830.99590.92070.92060.91240.92980.96090.9795
AQI 0.99690.97251.02530.96170.97070.6691.09511.04931.0821.5452
SGI 1.65771.78391.89821.73961.42231.28881.21881.23171.27051.2517
DEPI 1.09741.12651.1791.091.08871.11371.05010.8960.88240.8461
SGAI 1.04131.05961.13691.1191.09151.06351.04071.0321.04871.1084
LVGI 1.02171.02851.13580.98110.96941.06761.02041.03851.06560.9741
TATA -0.0658-0.0705-0.0696-0.0393-0.0545-0.0346-0.032-0.0394-0.0479-0.0606
M-score -1.88-2.16-2.16-2.34-2.53-2.62-2.36-2.35-2.48-2.34
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