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Beneish M-Score 0.05 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.
During the past 13 years, the highest Beneish M-Score of Vivus was 178.35. The lowest was -55.78. And the median was -2.29.
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 * 1.1749||+||0.528 * 1.1861||+||0.404 * 1.0759||+||0.892 * 3.5005||+||0.115 * 0.5604|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.2006||+||4.679 * -0.0091||-||0.327 * 1.1032|
|This Year (Sep14) TTM:||Last Year (Sep13) TTM:|
|Accounts Receivable was $27.10 Mil.|
Revenue was 33.877 + 21.881 + 36.691 + 44.057 = $136.51 Mil.
Gross Profit was 26.609 + 14.866 + 27.158 + 40.892 = $109.53 Mil.
Total Current Assets was $382.46 Mil.
Total Assets was $391.82 Mil.
Property, Plant and Equipment(Net PPE) was $1.51 Mil.
Depreciation, Depletion and Amortization(DDA) was $0.95 Mil.
Selling, General & Admin. Expense(SGA) was $121.27 Mil.
Total Current Liabilities was $57.74 Mil.
Long-Term Debt was $217.11 Mil.
Net Income was -15.825 + -25.825 + -15.55 + -17.164 = $-74.36 Mil.
Non Operating Income was -16.27 + -16.682 + -16.116 + 24.337 = $-24.73 Mil.
Cash Flow from Operations was -14.107 + 7.062 + -24.917 + -14.113 = $-46.08 Mil.
|Accounts Receivable was $6.59 Mil.
Revenue was 27.379 + 5.534 + 4.112 + 1.971 = $39.00 Mil.
Gross Profit was 26.638 + 4.962 + 3.722 + 1.788 = $37.11 Mil.
Total Current Assets was $411.64 Mil.
Total Assets was $422.48 Mil.
Property, Plant and Equipment(Net PPE) was $2.97 Mil.
Depreciation, Depletion and Amortization(DDA) was $0.82 Mil.
Selling, General & Admin. Expense(SGA) was $172.69 Mil.
Total Current Liabilities was $58.99 Mil.
Long-Term Debt was $209.64 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)|
|=||(27.099 / 136.506)||/||(6.589 / 38.996)|
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)|
|=||(14.866 / 38.996)||/||(26.609 / 136.506)|
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 - (382.46 + 1.506) / 391.823)||/||(1 - (411.636 + 2.968) / 422.478)|
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))|
|=||(0.82 / (0.82 + 2.968))||/||(0.948 / (0.948 + 1.506))|
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)|
|=||(121.272 / 136.506)||/||(172.686 / 38.996)|
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)|
|=||((217.11 + 57.742) / 391.823)||/||((209.642 + 58.989) / 422.478)|
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|
|=||(-74.364 - -24.731||-||-46.075)||/||391.823|
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 0.05 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