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

Warning Sign:

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.

VVUS' s 10-Year Beneish M-Score Range
Min: -10000000   Max: 178.35
Current: 5.46

-10000000
178.35

During the past 13 years, the highest Beneish M-Score of Vivus was 178.35. The lowest was -10000000.00. And the median was -2.18.


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 * 0.2343+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
=5.46

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

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

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)
=(13.284 / 130.008) / (5.085 / 11.658)
=0.10217833 / 0.43618116
=0.2343

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)
=(27.158 / 11.658) / (14.866 / 130.008)
=0.90144107 / 0.84267122
=1.0697

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 - (393.559 + 1.725) / 400.674) / (1 - (415.895 + 3.329) / 427.012)
=0.01345233 / 0.01823836
=0.7376

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
=130.008 / 11.658
=11.1518

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))
=0.16040353 / 0.3618202
=0.4433

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)
=1.01233001 / 14.22096414
=0.0712

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)
=0.67260416 / 0.5664712
=1.1874

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
=(-106.743 - -32.095 - -42.85) / 400.674
=-0.0794

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.


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 5.09341.06570.56980.28233.5675119.51820.1091
GMI 1.41231.71030.39550.8821.1601110.83920.965
AQI 0.581200.39162.80870.309100-0-6.15469837634E+13
SGI 0.71440.74763.17181.8690.4895000.040240.2992
DEPI 0.86691.81720.87810.87640.88890.42450.6751.33780.3669
SGAI 1.66891.35880.37570.58212.273111129.67760.0358
LVGI 1.91461.35711.8210.67920.51050.46070.39050.84433.9354
TATA 0.0197-0.0675-0.65410.25820.18190.0392-0.0403-0.0291-0.0923
M-score 0.74-3.07-4.74-0.330.01-3.48-3.80-18.17-24,864,981,440,395.09

Vivus Quarterly Data

Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14
DSRI 0.10910.34330.2343
GMI 0.9651.03311.0697
AQI -6.15469837634E+132.82610.7376
SGI 40.299218.559911.1518
DEPI 0.36690.36050.4433
SGAI 0.0360.05430.0712
LVGI 3.93543.7761.1874
TATA -0.073-0.0345-0.0794
M-score -24,864,981,440,394.9912.355.46
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