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Valeant Pharmaceuticals International Inc (NYSE:VRX)
Beneish M-Score
-2.16 (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 -2.16 signals that the company is a manipulator.

VRX' s 10-Year Beneish M-Score Range
Min: -3.69   Max: 2.53
Current: -2.16

-3.69
2.53

During the past 13 years, the highest Beneish M-Score of Valeant Pharmaceuticals International Inc was 2.53. The lowest was -3.69. And the median was -2.36.


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 * 0.9073+0.528 * 1.0927+0.404 * 0.9725+0.892 * 1.7839+0.115 * 1.1265
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0565+4.679 * -0.0705-0.327 * 1.0285
=-2.16

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

This Year (Mar14) TTM:Last Year (Mar13) TTM:
Accounts Receivable was $1,706 Mil.
Revenue was 1886.2 + 2063.757 + 1541.731 + 1095.762 = $6,587 Mil.
Gross Profit was 1367.8 + 1331.82 + 966.523 + 798.12 = $4,464 Mil.
Total Current Assets was $3,950 Mil.
Total Assets was $27,989 Mil.
Property, Plant and Equipment(Net PPE) was $1,215 Mil.
Depreciation, Depletion and Amortization(DDA) was $2,075 Mil.
Selling, General & Admin. Expense(SGA) was $1,541 Mil.
Total Current Liabilities was $2,563 Mil.
Long-Term Debt was $17,148 Mil.
Net Income was -22.6 + 123.765 + -973.243 + 10.866 = $-861 Mil.
Non Operating Income was -107.1 + -41.375 + -3.082 + -6.119 = $-158 Mil.
Cash Flow from Operations was 484.3 + 279.868 + 201.712 + 305.028 = $1,271 Mil.
Accounts Receivable was $1,054 Mil.
Revenue was 1068.4 + 920.043 + 884.14 + 820.09 = $3,693 Mil.
Gross Profit was 768.1 + 702.202 + 653.888 + 610.323 = $2,735 Mil.
Total Current Assets was $2,370 Mil.
Total Assets was $17,486 Mil.
Property, Plant and Equipment(Net PPE) was $453 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,112 Mil.
Selling, General & Admin. Expense(SGA) was $818 Mil.
Total Current Liabilities was $1,646 Mil.
Long-Term Debt was $10,327 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)
=(1706.2 / 6587.45) / (1054.161 / 3692.673)
=0.25900766 / 0.28547369
=0.9073

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)
=(1331.82 / 3692.673) / (1367.8 / 6587.45)
=0.74052401 / 0.67769213
=1.0927

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 - (3950.1 + 1215) / 27989) / (1 - (2370.129 + 452.969) / 17486.467)
=0.81545964 / 0.83855527
=0.9725

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
=6587.45 / 3692.673
=1.7839

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))
=(1112.04 / (1112.04 + 452.969)) / (2075.461 / (2075.461 + 1215))
=0.7105646 / 0.63075083
=1.1265

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)
=(1540.817 / 6587.45) / (817.542 / 3692.673)
=0.23390189 / 0.22139572
=1.0565

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)
=((17148 + 2563) / 27989) / ((10327.444 + 1646.128) / 17486.467)
=0.70424095 / 0.68473363
=1.0285

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
=(-861.212 - -157.676 - 1270.908) / 27989
=-0.0705

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 -2.16 signals that the company is likely to 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

Dec04Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13
DSRI 0.7770.83570.8561.70610.58111.13931.75280.96431.13621.1979
GMI 1.11120.95180.97911.09210.99321.00751.11820.93130.97721.077
AQI 0.94930.79780.74621.11531.29221.29081.1230.98340.94760.9969
SGI 1.06731.06731.13790.78940.89841.08351.43982.08551.41281.6578
DEPI 1.81320.95371.12661.04740.72510.69471.24260.79550.87651.0974
SGAI 0.97850.84031.13330.69551.53130.74761.27420.85120.91591.0413
LVGI 0.840.91021.09210.55850.9881.49961.29341.44061.20911.0217
TATA -0.04-0.1095-0.0684-0.02690.0007-0.0981-0.0397-0.0375-0.0431-0.0658
M-score -2.62-3.14-2.96-1.85-2.96-2.77-1.58-1.91-2.29-1.98

Valeant Pharmaceuticals International Inc Quarterly Data

Dec11Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14
DSRI 0.96430.70430.89841.21251.13621.28161.37781.43351.19790.9073
GMI 0.93130.92130.92910.94120.97720.94080.95871.01781.0771.0927
AQI 0.98340.99030.9660.96590.94760.97940.87610.96840.99690.9725
SGI 2.08551.80431.56291.4191.41281.34061.33831.42391.65781.7839
DEPI 0.79550.8460.86210.90840.87650.87510.90331.08311.09741.1265
SGAI 0.85120.81380.85640.95020.91590.9760.87811.05751.03771.0565
LVGI 1.44061.25011.34021.18481.20911.19431.02941.1631.02171.0285
TATA -0.0375-0.0457-0.0537-0.0558-0.0431-0.0476-0.0429-0.0661-0.0658-0.0705
M-score -1.91-2.36-2.48-2.28-2.29-2.25-2.10-2.07-1.98-2.16
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