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GuruFocus has detected 7 Warning Signs with PDL BioPharma Inc $PDLI.
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PDL BioPharma Inc (NAS:PDLI)
Beneish M-Score
-0.83 (As of Today)

Warning Sign:

Beneish M-Score -0.83 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.

PDL BioPharma Inc has a M-score of -0.83 signals that the company is a manipulator.

PDLI' s Beneish M-Score Range Over the Past 10 Years
Min: -5.18   Max: 10000000
Current: -0.83

-5.18
10000000

During the past 13 years, the highest Beneish M-Score of PDL BioPharma Inc was 10000000.00. The lowest was -5.18. And the median was -2.40.


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 PDL BioPharma Inc 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 * 4.3157+0.528 * 1.0139+0.404 * 0.8712+0.892 * 0.3431+0.115 * -0.8724
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 3.4757+4.679 * -0.0087-0.327 * 1.2724
=-0.83

* 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 $125.3 Mil.
Revenue was 45.44 + 66.492 + 53.638 + 21.047 = $186.6 Mil.
Gross Profit was 42.888 + 66.492 + 53.638 + 21.047 = $184.1 Mil.
Total Current Assets was $544.0 Mil.
Total Assets was $1,237.8 Mil.
Property, Plant and Equipment(Net PPE) was $0.8 Mil.
Depreciation, Depletion and Amortization(DDA) was $18.0 Mil.
Selling, General & Admin. Expense(SGA) was $45.6 Mil.
Total Current Liabilities was $275.3 Mil.
Long-Term Debt was $112.4 Mil.
Net Income was 7.241 + -10.336 + 13.907 + 4.148 = $15.0 Mil.
Non Operating Income was -5.457 + -7.856 + -8.594 + -7.343 = $-29.3 Mil.
Cash Flow from Operations was 45.782 + 15.653 + -8.687 + 2.246 = $55.0 Mil.
Accounts Receivable was $84.6 Mil.
Revenue was 103.124 + 178.058 + 124.618 + 138.066 = $543.9 Mil.
Gross Profit was 103.124 + 178.058 + 124.618 + 138.066 = $543.9 Mil.
Total Current Assets was $377.2 Mil.
Total Assets was $1,055.4 Mil.
Property, Plant and Equipment(Net PPE) was $0.0 Mil.
Depreciation, Depletion and Amortization(DDA) was $-0.0 Mil.
Selling, General & Admin. Expense(SGA) was $38.3 Mil.
Total Current Liabilities was $28.9 Mil.
Long-Term Debt was $230.9 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)
=(125.301 / 186.617) / (84.615 / 543.866)
=0.67143401 / 0.1555806
=4.3157

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)
=(543.866 / 543.866) / (184.065 / 186.617)
=1 / 0.98632493
=1.0139

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 - (544.019 + 0.846) / 1237.773) / (1 - (377.178 + 0.022) / 1055.375)
=0.55980216 / 0.6425915
=0.8712

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
=186.617 / 543.866
=0.3431

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))
=(-0.01 / (-0.01 + 0.022)) / (18.043 / (18.043 + 0.846))
=-0.83333333 / 0.95521203
=-0.8724

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)
=(45.642 / 186.617) / (38.27 / 543.866)
=0.24457579 / 0.0703666
=3.4757

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)
=((112.426 + 275.25) / 1237.773) / ((230.85 + 28.934) / 1055.375)
=0.31320444 / 0.24615326
=1.2724

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
=(14.96 - -29.25 - 54.994) / 1237.773
=-0.0087

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.

PDL BioPharma Inc has a M-score of -0.83 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 local exchange's currency.

PDL BioPharma Inc Annual Data

Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15Dec16
DSRI 0.2931.56240.07190.4121.2190.57980.68990.7785191.61936.2619
GMI 0.87551.142211111111
AQI 0.28990.4131.35511.52271.32292.5962.31640.78571.14370.9331
SGI 0.93831.67361.08151.08421.04951.0521.18811.28441.01590.4138
DEPI 1.23910.17651.11681.05960.81751.0461.03684.05595194486E+15-2-0
SGAI 0.46292.02210.39385.62610.12531.37450.98330.91351.01752.7007
LVGI 0.97865.04640.79030.8470.89640.68590.65440.6440.5441.1375
TATA -0.0696-0.13950.0035-0.23610.11270.01970.01840.08740.0603-0.0044
M-score -3.74-3.77-2.92-4.58-1.41-2.04-1.86466,434,473,658,722.06173.051.34

PDL BioPharma Inc Quarterly Data

Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16Dec16Mar17
DSRI 0.77854.13377.36841.3291191.61931.45710.0590.5716.26194.3157
GMI 1111111111.0139
AQI 0.78570.94460.84291.07371.14371.16711.11.01220.93310.8712
SGI 1.28441.19431.11280.9191.01590.91540.74960.67210.41380.3431
DEPI 4.05595194486E+15-0.44650.34790.459-22.4706-3.63391.5795-0-0.8724
SGAI 0.91351.17181.2681.79281.01751.10021.30931.43292.70073.4757
LVGI 0.6440.77120.6710.67360.5440.44180.57210.79521.13751.2724
TATA 0.08740.07840.06420.02810.06030.00970.01550.0365-0.0044-0.0087
M-score 466,434,473,658,722.060.803.70-2.18173.05-1.69-3.90-2.931.34-0.83
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