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Valeant Pharmaceuticals International Inc (NYSE:VRX)
Beneish M-Score
-2.12 (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 -2.37 suggests that the company is not a manipulator.

VRX' s Beneish M-Score Range Over the Past 10 Years
Min: -3.58   Max: 2.53
Current: -2.12

-3.58
2.53

During the past 13 years, the highest Beneish M-Score of Valeant Pharmaceuticals International Inc was 2.53. The lowest was -3.58. And the median was -2.41.


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 * 1.1129+0.528 * 0.9591+0.404 * 1.0493+0.892 * 1.2886+0.115 * 0.896
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0112+4.679 * -0.0467-0.327 * 1.0385
=-2.37

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

This Year (Sep15) TTM:Last Year (Sep14) TTM:
Accounts Receivable was $2,696 Mil.
Revenue was 2786.8 + 2732.4 + 2190.9 + 0 = $7,710 Mil.
Gross Profit was 2138.6 + 2047.3 + 1616.2 + 0 = $5,802 Mil.
Total Current Assets was $6,996 Mil.
Total Assets was $48,455 Mil.
Property, Plant and Equipment(Net PPE) was $1,351 Mil.
Depreciation, Depletion and Amortization(DDA) was $2,258 Mil.
Selling, General & Admin. Expense(SGA) was $1,957 Mil.
Total Current Liabilities was $4,651 Mil.
Long-Term Debt was $30,176 Mil.
Net Income was 49.5 + -53 + 73.7 + 0 = $70 Mil.
Non Operating Income was -34 + 5.6 + -91.1 + 0 = $-120 Mil.
Cash Flow from Operations was 736.5 + 410.5 + 491.1 + 815.7 = $2,454 Mil.
Accounts Receivable was $1,880 Mil.
Revenue was 2056.2 + 2041.1 + 1886.2 + 0 = $5,984 Mil.
Gross Profit was 1495.4 + 1455.5 + 1367.8 + 0 = $4,319 Mil.
Total Current Assets was $4,414 Mil.
Total Assets was $27,060 Mil.
Property, Plant and Equipment(Net PPE) was $1,300 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,659 Mil.
Selling, General & Admin. Expense(SGA) was $1,502 Mil.
Total Current Liabilities was $3,143 Mil.
Long-Term Debt was $15,584 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)
=(2696.3 / 7710.1) / (1880.2 / 5983.5)
=0.34971012 / 0.3142308
=1.1129

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)
=(2047.3 / 5983.5) / (2138.6 / 7710.1)
=0.7217682 / 0.75253239
=0.9591

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 - (6995.7 + 1351.4) / 48454.6) / (1 - (4413.7 + 1300.4) / 27059.6)
=0.82773359 / 0.7888328
=1.0493

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
=7710.1 / 5983.5
=1.2886

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))
=(1658.6 / (1658.6 + 1300.4)) / (2257.9 / (2257.9 + 1351.4))
=0.56052721 / 0.62557837
=0.896

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)
=(1956.9 / 7710.1) / (1501.8 / 5983.5)
=0.25380994 / 0.25099022
=1.0112

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)
=((30176.3 + 4650.5) / 48454.6) / ((15584.3 + 3143.3) / 27059.6)
=0.71875116 / 0.6920871
=1.0385

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
=(70.2 - -119.5 - 2453.8) / 48454.6
=-0.0467

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 -2.37 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

Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14
DSRI 0.83570.8561.08910.90211.14951.70170.81751.16241.31420.8645
GMI 0.95180.97911.09210.99321.00751.11820.93130.97721.0770.9211
AQI 0.79780.74621.11531.29221.29081.1230.98340.94760.99690.9684
SGI 1.06731.13790.78940.89841.08351.43982.08551.41281.65781.4322
DEPI 0.95371.12661.04740.72510.69471.24260.79550.87651.09741.088
SGAI 0.84031.13330.69551.53130.74761.27420.85120.91591.04131.0839
LVGI 0.91021.09210.55850.9881.49961.29341.44061.20911.02170.9702
TATA -0.1095-0.0684-0.02690.0007-0.0981-0.0397-0.0375-0.0431-0.0658-0.0531
M-score -3.14-2.96-2.41-2.66-2.76-1.63-2.04-2.27-1.88-2.52

Valeant Pharmaceuticals International Inc Quarterly Data

Jun13Sep13Dec13Mar14Jun14Sep14Dec14Mar15Jun15Sep15
DSRI 1.37721.41021.50520.9920.87570.70870.76690.88911.04921.1129
GMI 0.95861.03361.03361.05861.0510.94690.94690.95340.93750.9591
AQI 0.87610.96840.99690.97251.02530.96170.96840.6691.09511.0493
SGI 1.33881.44741.44741.63151.79421.61461.61461.39011.27621.2886
DEPI 0.90331.08311.09741.12651.1791.091.0881.11371.05010.896
SGAI 0.92690.97120.97121.00231.09661.0881.0881.04691.0211.0112
LVGI 1.02941.1631.02171.02851.13580.98110.97021.06761.02041.0385
TATA -0.0392-0.0636-0.0717-0.0764-0.0756-0.0454-0.067-0.0439-0.0394-0.0467
M-score -2.09-2.03-1.93-2.26-2.24-2.45-2.50-2.61-2.37-2.37
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