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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 -2.47 suggests that the company is not a manipulator.

VRX' s Beneish M-Score Range Over the Past 10 Years
Min: -3.4   Max: 0.77
Current: -2.26

-3.4
0.77

During the past 13 years, the highest Beneish M-Score of Valeant Pharmaceuticals International Inc was 0.77. The lowest was -3.40. And the median was -2.30.


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 * 1.0168+0.528 * 0.9667+0.404 * 1.082+0.892 * 1.273+0.115 * 0.8824
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0466+4.679 * -0.0484-0.327 * 1.0656
=-2.47

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

This Year (Dec15) TTM:Last Year (Dec14) TTM:
Accounts Receivable was $2,687 Mil.
Revenue was 2736.4 + 2786.8 + 2732.4 + 2190.9 = $10,447 Mil.
Gross Profit was 2059.7 + 2138.6 + 2047.3 + 1616.2 = $7,862 Mil.
Total Current Assets was $5,507 Mil.
Total Assets was $48,965 Mil.
Property, Plant and Equipment(Net PPE) was $1,442 Mil.
Depreciation, Depletion and Amortization(DDA) was $2,628 Mil.
Selling, General & Admin. Expense(SGA) was $2,700 Mil.
Total Current Liabilities was $5,313 Mil.
Long-Term Debt was $30,265 Mil.
Net Income was -361.9 + 49.5 + -53 + 73.7 = $-292 Mil.
Non Operating Income was -3.3 + -34 + 5.6 + -91.1 = $-123 Mil.
Cash Flow from Operations was 562.4 + 736.5 + 410.5 + 491.1 = $2,201 Mil.
Accounts Receivable was $2,076 Mil.
Revenue was 2222.5 + 2056.2 + 2041.1 + 1886.2 = $8,206 Mil.
Gross Profit was 1651.2 + 1495.4 + 1455.5 + 1367.8 = $5,970 Mil.
Total Current Assets was $4,132 Mil.
Total Assets was $26,305 Mil.
Property, Plant and Equipment(Net PPE) was $1,312 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,738 Mil.
Selling, General & Admin. Expense(SGA) was $2,026 Mil.
Total Current Liabilities was $2,708 Mil.
Long-Term Debt was $15,228 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)
=(2686.9 / 10446.5) / (2075.8 / 8206)
=0.25720576 / 0.25296125
=1.0168

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)
=(2138.6 / 8206) / (2059.7 / 10446.5)
=0.72750427 / 0.75257742
=0.9667

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 - (5507.2 + 1441.8) / 48964.5) / (1 - (4131.7 + 1312.3) / 26304.7)
=0.85808085 / 0.79304079
=1.082

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
=10446.5 / 8206
=1.273

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))
=(1737.6 / (1737.6 + 1312.3)) / (2627.5 / (2627.5 + 1441.8))
=0.5697236 / 0.64568845
=0.8824

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)
=(2699.8 / 10446.5) / (2026.3 / 8206)
=0.25844063 / 0.24692908
=1.0466

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)
=((30265.4 + 5312.6) / 48964.5) / ((15228 + 2708.4) / 26304.7)
=0.72660805 / 0.68187054
=1.0656

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
=(-291.7 - -122.8 - 2200.5) / 48964.5
=-0.0484

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 -2.47 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

Sep13Dec13Mar14Jun14Sep14Dec14Mar15Jun15Sep15Dec15
DSRI 1.41761.31420.90730.82770.65780.87060.95671.09611.16191.0168
GMI 1.02691.0771.09271.0830.99590.92070.92750.91870.93570.9667
AQI 0.96840.99690.97251.02530.96170.97070.6691.09511.04931.082
SGI 1.43981.65771.78391.89821.73961.42231.2921.22161.23431.273
DEPI 1.08311.09741.12651.1791.091.08871.11371.05010.8960.8824
SGAI 0.92341.04131.05961.13691.1191.09151.06091.03841.02991.0466
LVGI 1.1631.02171.02851.13580.98110.96941.06761.02041.03851.0656
TATA -0.0661-0.0658-0.0705-0.0696-0.0393-0.0545-0.0352-0.0325-0.0399-0.0484
M-score -2.04-1.88-2.16-2.16-2.34-2.53-2.62-2.36-2.35-2.47
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