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GuruFocus has detected 2 Warning Signs with Alkermes PLC $ALKS.
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Alkermes PLC (NAS:ALKS)
Beneish M-Score
-2.73 (As of Today)

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.

Alkermes PLC has a M-score of -2.73 suggests that the company is not a manipulator.

ALKS' s Beneish M-Score Range Over the Past 10 Years
Min: -6.86   Max: 0.44
Current: -2.73

-6.86
0.44

During the past 13 years, the highest Beneish M-Score of Alkermes PLC was 0.44. The lowest was -6.86. And the median was -2.65.


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 Alkermes PLC 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 * 1.0088+0.528 * 0.9784+0.404 * 1.0466+0.892 * 1.2513+0.115 * 0.9479
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9132+4.679 * -0.1058-0.327 * 1.003
=-2.73

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

This Year (Mar17) TTM:Last Year (Mar16) TTM:
Accounts Receivable was $176.5 Mil.
Revenue was 191.778 + 213.513 + 180.241 + 195.165 = $780.7 Mil.
Gross Profit was 151.366 + 178.556 + 144.785 + 161.167 = $635.9 Mil.
Total Current Assets was $758.9 Mil.
Total Assets was $1,729.8 Mil.
Property, Plant and Equipment(Net PPE) was $264.9 Mil.
Depreciation, Depletion and Amortization(DDA) was $95.3 Mil.
Selling, General & Admin. Expense(SGA) was $386.5 Mil.
Total Current Liabilities was $210.7 Mil.
Long-Term Debt was $280.1 Mil.
Net Income was -68.881 + -21.141 + -62.687 + -47.193 = $-199.9 Mil.
Non Operating Income was 0.101 + 3.285 + -1.752 + 1.733 = $3.4 Mil.
Cash Flow from Operations was -13.747 + 7.558 + 14.732 + -28.878 = $-20.3 Mil.
Accounts Receivable was $139.8 Mil.
Revenue was 156.774 + 163.098 + 152.653 + 151.37 = $623.9 Mil.
Gross Profit was 129.063 + 128.307 + 118.847 + 120.952 = $497.2 Mil.
Total Current Assets was $838.6 Mil.
Total Assets was $1,794.9 Mil.
Property, Plant and Equipment(Net PPE) was $256.3 Mil.
Depreciation, Depletion and Amortization(DDA) was $85.8 Mil.
Selling, General & Admin. Expense(SGA) was $338.2 Mil.
Total Current Liabilities was $224.1 Mil.
Long-Term Debt was $283.7 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)
=(176.487 / 780.697) / (139.814 / 623.895)
=0.22606338 / 0.22409861
=1.0088

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)
=(497.169 / 623.895) / (635.874 / 780.697)
=0.79687928 / 0.81449525
=0.9784

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 - (758.851 + 264.915) / 1729.827) / (1 - (838.56 + 256.326) / 1794.887)
=0.40816856 / 0.38999725
=1.0466

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
=780.697 / 623.895
=1.2513

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))
=(85.812 / (85.812 + 256.326)) / (95.316 / (95.316 + 264.915))
=0.25081108 / 0.26459688
=0.9479

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)
=(386.51 / 780.697) / (338.227 / 623.895)
=0.49508324 / 0.54212167
=0.9132

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)
=((280.109 + 210.742) / 1729.827) / ((283.664 + 224.131) / 1794.887)
=0.28375728 / 0.28291196
=1.003

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
=(-199.902 - 3.367 - -20.335) / 1729.827
=-0.1058

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.

Alkermes PLC has a M-score of -2.73 suggests that the company will not 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 local exchange's currency.

Alkermes PLC Annual Data

Mar07Mar08Mar09Mar10Mar11Mar12Mar13Dec14Dec15Dec16
DSRI 0.97770.84040.38331.88760.86672.00820.87611.13111.01041.0356
GMI 1.05840.97660.95821.21.00321.07070.9560.98320.91920.9465
AQI 0.62359.3130.74491.0521.48052.39320.95180.76941.12660.8525
SGI 1.44041.00311.35780.54551.04692.08951.47591.07511.01541.1868
DEPI 0.99370.90841.10710.42852.45940.61150.67020.75531.07220.9578
SGAI 1.14150.89340.73032.37721.03430.79510.61911.47851.53491.0118
LVGI 0.45350.80070.68260.840.60093.48020.82460.81981.12211.0176
TATA -0.1293-0.07560.1721-0.0524-0.087-0.0778-0.0703-0.0655-0.1062-0.0869
M-score -2.680.44-1.89-2.44-2.48-1.16-2.46-2.75-3.07-2.79

Alkermes PLC Quarterly Data

Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16Dec16Mar17
DSRI 0.99910.86960.91641.02561.32181.15931.03561.0088
GMI 0.95170.94430.93060.91310.92770.94410.94650.9784
AQI 0.78790.90430.8171.15050.97351.10180.85251.0466
SGI 1.15391.12081.07070.96011.03081.08571.18681.2513
DEPI 0.96380.93610.99811.06551.10511.03970.95780.9479
SGAI 1.20051.21731.37621.59831.45871.20371.01180.9132
LVGI 0.98581.02491.02771.17391.1551.06981.01761.003
TATA -0.0724-0.0777-0.0909-0.1041-0.092-0.1092-0.0869-0.1058
M-score -2.83-2.98-3.10-3.12-2.75-2.81-2.79-2.73
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