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Valeant Pharmaceuticals International Inc (NYSE:VRX)
Beneish M-Score
-2.67 (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 -2.71 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: -2.67

-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 -2.29.


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 * 1.0258+0.528 * 0.998+0.404 * 1.0076+0.892 * 1.1235+0.115 * 0.8583
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.1378+4.679 * -0.0685-0.327 * 1.0266
=-2.71

* 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 $2,733 Mil.
Revenue was 2420.2 + 2371.6 + 2736.4 + 2786.8 = $10,315 Mil.
Gross Profit was 1762.4 + 1741.7 + 2059.7 + 2138.6 = $7,702 Mil.
Total Current Assets was $5,818 Mil.
Total Assets was $47,662 Mil.
Property, Plant and Equipment(Net PPE) was $1,472 Mil.
Depreciation, Depletion and Amortization(DDA) was $3,267 Mil.
Selling, General & Admin. Expense(SGA) was $2,925 Mil.
Total Current Liabilities was $4,226 Mil.
Long-Term Debt was $30,773 Mil.
Net Income was -302.3 + -373.7 + -361.9 + 49.5 = $-988 Mil.
Non Operating Income was 13.1 + -6.2 + -3.3 + -34 = $-30 Mil.
Cash Flow from Operations was 448.1 + 558.1 + 562.4 + 736.5 = $2,305 Mil.
Accounts Receivable was $2,371 Mil.
Revenue was 2732.4 + 2170.1 + 2222.5 + 2056.2 = $9,181 Mil.
Gross Profit was 2047.3 + 1647.9 + 1651.2 + 1495.4 = $6,842 Mil.
Total Current Assets was $6,345 Mil.
Total Assets was $48,343 Mil.
Property, Plant and Equipment(Net PPE) was $1,360 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,971 Mil.
Selling, General & Admin. Expense(SGA) was $2,288 Mil.
Total Current Liabilities was $4,291 Mil.
Long-Term Debt was $30,290 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)
=(2732.5 / 10315) / (2371 / 9181.2)
=0.26490548 / 0.25824511
=1.0258

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)
=(6841.8 / 9181.2) / (7702.4 / 10315)
=0.74519671 / 0.74671837
=0.998

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 - (5818.4 + 1472.1) / 47662.2) / (1 - (6345.2 + 1359.9) / 48343.2)
=0.84703811 / 0.84061667
=1.0076

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
=10315 / 9181.2
=1.1235

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))
=(1970.8 / (1970.8 + 1359.9)) / (3267.4 / (3267.4 + 1472.1))
=0.59170745 / 0.68939762
=0.8583

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)
=(2924.6 / 10315) / (2287.9 / 9181.2)
=0.28352884 / 0.24919401
=1.1378

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)
=((30773.2 + 4226.4) / 47662.2) / ((30290.2 + 4291) / 48343.2)
=0.73432615 / 0.71532708
=1.0266

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
=(-988.4 - -30.4 - 2305.1) / 47662.2
=-0.0685

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 -2.71 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 0.8561.08910.90211.14951.70170.82961.14541.31420.87061.0168
GMI 0.97911.09210.99321.00751.11820.92050.98871.0770.92070.9667
AQI 0.74621.11531.29221.29081.1230.98340.94760.99690.97071.082
SGI 1.13790.78940.89841.08351.43982.0551.43381.65771.42231.273
DEPI 1.12661.04740.72510.69471.24260.79550.87651.09741.08870.8824
SGAI 1.13330.69551.53130.74761.27420.84630.92121.04131.09151.0466
LVGI 1.09210.55850.9881.49961.29341.44061.20911.02170.96941.0656
TATA -0.1402-0.08490.0007-0.0981-0.0397-0.0376-0.0431-0.0658-0.0545-0.0484
M-score -3.30-2.69-2.66-2.76-1.63-2.06-2.26-1.88-2.53-2.47

Valeant Pharmaceuticals International Inc Quarterly Data

Mar14Jun14Sep14Dec14Mar15Jun15Sep15Dec15Mar16Jun16
DSRI 0.90730.82770.65780.87060.9591.09861.16431.01881.02011.0258
GMI 1.09271.0830.99590.92070.92060.91240.92980.96090.97950.998
AQI 0.97251.02530.96170.97070.6691.09511.04931.0821.54521.0076
SGI 1.78391.89821.73961.42231.28881.21881.23171.27051.25171.1235
DEPI 1.12651.1791.091.08871.11371.05010.8960.88240.84610.8583
SGAI 1.05961.13691.1191.09151.06351.04071.0321.04871.10841.1378
LVGI 1.02851.13580.98110.96941.06761.02041.03851.06560.97411.0266
TATA -0.0705-0.0696-0.0393-0.0545-0.0346-0.032-0.0394-0.0479-0.0606-0.0685
M-score -2.16-2.16-2.34-2.53-2.62-2.36-2.35-2.48-2.34-2.71
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