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Beneish M-Score 35.11 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 35.11 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 -4.74. And the median was -2.38.
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 * 0.1091||+||0.528 * 0.965||+||0.404 * 12.5764||+||0.892 * 40.2992||+||0.115 * 0.3669|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.0367||+||4.679 * -0.0923||-||0.327 * 3.9354|
|This Year (Dec13) TTM:||Last Year (Dec12) TTM:|
|Accounts Receivable was $12.21 Mil.|
Revenue was 44.057 + 27.379 + 5.534 + 4.112 = $81.08 Mil.
Gross Profit was 40.892 + 26.638 + 4.962 + 3.722 = $76.21 Mil.
Total Current Assets was $423.94 Mil.
Total Assets was $431.80 Mil.
Property, Plant and Equipment(Net PPE) was $1.95 Mil.
Depreciation, Depletion and Amortization(DDA) was $0.97 Mil.
Selling, General & Admin. Expense(SGA) was $162.16 Mil.
Total Current Liabilities was $52.01 Mil.
Long-Term Debt was $213.11 Mil.
Net Income was -17.164 + -48.204 + -55.512 + -53.576 = $-174.46 Mil.
Non Operating Income was 0.703 + 0 + 0 + 0 = $0.70 Mil.
Cash Flow from Operations was -14.113 + -10.882 + -48.211 + -62.119 = $-135.33 Mil.
|Accounts Receivable was $2.78 Mil.
Revenue was 1.971 + 0.041 + 0 + 0 = $2.01 Mil.
Gross Profit was 1.788 + 0.037 + 0 + 0 = $1.83 Mil.
Total Current Assets was $261.88 Mil.
Total Assets was $264.11 Mil.
Property, Plant and Equipment(Net PPE) was $1.95 Mil.
Depreciation, Depletion and Amortization(DDA) was $0.27 Mil.
Selling, General & Admin. Expense(SGA) was $109.51 Mil.
Total Current Liabilities was $41.21 Mil.
Long-Term Debt was $0.00 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)|
|=||(12.214 / 81.082)||/||(2.778 / 2.012)|
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)|
|=||(26.638 / 2.012)||/||(40.892 / 81.082)|
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 - (423.941 + 1.954) / 431.796)||/||(1 - (261.876 + 1.951) / 264.114)|
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))|
|=||(0.271 / (0.271 + 1.951))||/||(0.973 / (0.973 + 1.954))|
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)|
|=||(162.159 / 81.082)||/||(109.508 / 2.012)|
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)|
|=||((213.106 + 52.007) / 431.796)||/||((0 + 41.205) / 264.114)|
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|
|=||(-174.456 - 0.703||-||-135.325)||/||431.796|
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 35.11 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