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Vivus (NAS:VVUS)
Beneish M-Score
12.26 (As of Today)

Warning Sign:

Beneish M-Score 12.26 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 12.26 signals that the company is a manipulator.

VVUS' s 10-Year Beneish M-Score Range
Min: -55.78   Max: 178.35
Current: 12.26

-55.78
178.35

During the past 13 years, the highest Beneish M-Score of Vivus was 178.35. The lowest was -55.78. And the median was -2.38.


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 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 * 0.3433+0.528 * 1.0331+0.404 * 2.8261+0.892 * 18.5599+0.115 * 0.3605
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.0555+4.679 * -0.0544-0.327 * 3.776
=12.26

* 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 $31.08 Mil.
Revenue was 36.691 + 44.057 + 27.379 + 5.534 = $113.66 Mil.
Gross Profit was 27.158 + 40.892 + 26.638 + 4.962 = $99.65 Mil.
Total Current Assets was $413.54 Mil.
Total Assets was $420.90 Mil.
Property, Plant and Equipment(Net PPE) was $1.76 Mil.
Depreciation, Depletion and Amortization(DDA) was $1.00 Mil.
Selling, General & Admin. Expense(SGA) was $146.07 Mil.
Total Current Liabilities was $49.96 Mil.
Long-Term Debt was $216.59 Mil.
Net Income was -15.55 + -17.164 + -48.204 + -55.512 = $-136.43 Mil.
Non Operating Income was -16.116 + 0.703 + 0 + 0 = $-15.41 Mil.
Cash Flow from Operations was -24.917 + -14.113 + -10.882 + -48.211 = $-98.12 Mil.
Accounts Receivable was $4.88 Mil.
Revenue was 4.112 + 1.971 + 0.041 + 0 = $6.12 Mil.
Gross Profit was 3.722 + 1.788 + 0.037 + 0 = $5.55 Mil.
Total Current Assets was $207.07 Mil.
Total Assets was $210.93 Mil.
Property, Plant and Equipment(Net PPE) was $2.87 Mil.
Depreciation, Depletion and Amortization(DDA) was $0.43 Mil.
Selling, General & Admin. Expense(SGA) was $141.72 Mil.
Total Current Liabilities was $35.38 Mil.
Long-Term Debt was $0.00 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)
=(31.079 / 113.661) / (4.878 / 6.124)
=0.27343592 / 0.79653821
=0.3433

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)
=(40.892 / 6.124) / (27.158 / 113.661)
=0.90578054 / 0.87672992
=1.0331

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 - (413.544 + 1.758) / 420.896) / (1 - (207.074 + 2.867) / 210.933)
=0.01329069 / 0.00470292
=2.8261

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
=113.661 / 6.124
=18.5599

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))
=(0.432 / (0.432 + 2.867)) / (1.003 / (1.003 + 1.758))
=0.13094877 / 0.36327418
=0.3605

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)
=(146.072 / 113.661) / (141.723 / 6.124)
=1.28515498 / 23.1422273
=0.0555

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)
=((216.594 + 49.964) / 420.896) / ((0 + 35.378) / 210.933)
=0.63331084 / 0.1677215
=3.776

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
=(-136.43 - -15.413 - -98.123) / 420.896
=-0.0544

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 12.26 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.

Vivus Annual Data

Dec04Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13
DSRI 5.09341.06570.56980.28235.6863115.97160.1091
GMI 1.41231.71030.39550.8820.8831111.10250.965
AQI 0.581200.39162.80872.8309000.03912.5764
SGI 0.71440.74763.17181.8690.3071000.064140.2992
DEPI 0.86691.81720.87810.87640.64590.58420.9291.84120.3669
SGAI 1.66891.35880.37570.58212.389211123.37410.0358
LVGI 1.91461.35711.8210.67920.45360.51860.43950.95033.9354
TATA 0.0197-0.0675-0.65410.25820.18450.0392-0.0608-0.0317-0.0923
M-score 0.74-3.07-4.74-0.332.65-3.48-3.89-20.1635.11

Vivus Quarterly Data

Dec11Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14
DSRI 111209.874923.02513.28327.27380.10910.3433
GMI 1110.89160.88710.88830.89260.9651.0331
AQI 00000.32561.40915.464812.57642.8261
SGI 0000.00280.13660.41590.791740.299218.5599
DEPI -0.1351-0.1396-0.1773-0.3613-0.2677-0.2494-0.20360.36690.3605
SGAI 1111418.884948.169520.481412.83020.03670.0555
LVGI 0.39320.210.25080.60940.85020.9143.08693.93543.776
TATA -0.0608-0.0456-0.0213-0.0437-0.03170.0278-0.0034-0.0924-0.0544
M-score -3.99-3.86-3.77-55.788.325.071.9835.1112.26
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