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Beneish M-Score 5.46 higher than -2.22, which implies that it might have manipulated its financial results.
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.
Vivus has a M-score of 5.46 signals that the company is a manipulator.
During the past 13 years, the highest Beneish M-Score of Vivus was 178.35. The lowest was -55.78. And the median was -2.34.
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 Vivus 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 * 0.2343||+||0.528 * 1.0697||+||0.404 * 0.7376||+||0.892 * 11.1518||+||0.115 * 0.4433|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.0712||+||4.679 * -0.0794||-||0.327 * 1.1874|
|This Year (Jun14) TTM:||Last Year (Jun13) TTM:|
|Accounts Receivable was $13.28 Mil.|
Revenue was 21.881 + 36.691 + 44.057 + 27.379 = $130.01 Mil.
Gross Profit was 14.866 + 27.158 + 40.892 + 26.638 = $109.55 Mil.
Total Current Assets was $393.56 Mil.
Total Assets was $400.67 Mil.
Property, Plant and Equipment(Net PPE) was $1.73 Mil.
Depreciation, Depletion and Amortization(DDA) was $0.98 Mil.
Selling, General & Admin. Expense(SGA) was $131.61 Mil.
Total Current Liabilities was $52.65 Mil.
Long-Term Debt was $216.84 Mil.
Net Income was -25.825 + -15.55 + -17.164 + -48.204 = $-106.74 Mil.
Non Operating Income was -16.682 + -16.116 + 0.703 + 0 = $-32.10 Mil.
Cash Flow from Operations was 7.062 + -24.917 + -14.113 + -10.882 = $-42.85 Mil.
|Accounts Receivable was $5.09 Mil.
Revenue was 5.534 + 4.112 + 1.971 + 0.041 = $11.66 Mil.
Gross Profit was 4.962 + 3.722 + 1.788 + 0.037 = $10.51 Mil.
Total Current Assets was $415.90 Mil.
Total Assets was $427.01 Mil.
Property, Plant and Equipment(Net PPE) was $3.33 Mil.
Depreciation, Depletion and Amortization(DDA) was $0.64 Mil.
Selling, General & Admin. Expense(SGA) was $165.79 Mil.
Total Current Liabilities was $35.67 Mil.
Long-Term Debt was $206.22 Mil.
1. DSRI = Days Sales in Receivables Index
A large increase in DSR could be indicative of revenue inflation.
|DSRI||=||(Receivables_t / Revenue_t)||/||(Receivables_t-1 / Revenue_t-1)|
|=||(13.284 / 130.008)||/||(5.085 / 11.658)|
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.
|=||(GrossProfit_t-1 / Revenue_t-1)||/||(GrossProfit_t / Revenue_t)|
|=||(27.158 / 11.658)||/||(14.866 / 130.008)|
3. AQI = Asset Quality Index
AQI is the ratio of asset quality in year t to year t-1.
|AQI||=||(1 - (CurrentAssets_t + PPE_t) / TotalAssets_t)||/||(1 - (CurrentAssets_t-1 + PPE_t-1) / TotalAssets_t-1)|
|=||(1 - (393.559 + 1.725) / 400.674)||/||(1 - (415.895 + 3.329) / 427.012)|
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.
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))|
|=||(0.636 / (0.636 + 3.329))||/||(0.978 / (0.978 + 1.725))|
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)|
|=||(131.611 / 130.008)||/||(165.788 / 11.658)|
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)|
|=||((216.841 + 52.654) / 400.674)||/||((206.22 + 35.67) / 427.012)|
8. TATA = Total Accruals to Total Assets
Total accruals calculated as the change in working capital accounts other than cash less depreciation.
|=||(NetIncome_t - NonOperatingIncome_t||-||CashFlowsfromOperations_t)||/||TotalAssets_t|
|=||(-106.743 - -32.095||-||-42.85)||/||400.674|
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.
Vivus has a M-score of 5.46 signals that the company is likely to be a manipulator.
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
Vivus Annual Data
Vivus Quarterly Data