Switch to:
GuruFocus has detected 6 Warning Signs with Shire PLC $SHPG.
More than 500,000 people have already joined GuruFocus to track the stocks they follow and exchange investment ideas.
Shire PLC (NAS:SHPG)
Beneish M-Score
-1.20 (As of Today)

Warning Sign:

Beneish M-Score -1.2 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.

Shire PLC has a M-score of -1.51 signals that the company is a manipulator.

SHPG' s Beneish M-Score Range Over the Past 10 Years
Min: -4.99   Max: -1.2
Current: -1.2

-4.99
-1.2

During the past 13 years, the highest Beneish M-Score of Shire PLC was -1.20. The lowest was -4.99. And the median was -2.58.


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 Shire 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 * 0.9837+0.528 * 1.3488+0.404 * 0.9177+0.892 * 1.9976+0.115 * 2.0886
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9039+4.679 * -0.0368-0.327 * 1.0708
=-1.51

* 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 $2,580 Mil.
Revenue was 3572.3 + 3806.1 + 3452.1 + 2429.1 = $13,260 Mil.
Gross Profit was 2245.3 + 2752.5 + 1715.9 + 1651 = $8,365 Mil.
Total Current Assets was $7,116 Mil.
Total Assets was $66,160 Mil.
Property, Plant and Equipment(Net PPE) was $6,496 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,784 Mil.
Selling, General & Admin. Expense(SGA) was $3,429 Mil.
Total Current Liabilities was $7,010 Mil.
Long-Term Debt was $19,496 Mil.
Net Income was 375 + 457.3 + -386.8 + -162.1 = $283 Mil.
Non Operating Income was 4.5 + -9.4 + -13.7 + 6 = $-13 Mil.
Cash Flow from Operations was 459.1 + 1152.9 + 525.6 + 590.9 = $2,729 Mil.
Accounts Receivable was $1,313 Mil.
Revenue was 1709.3 + 1715.7 + 1655 + 1557.6 = $6,638 Mil.
Gross Profit was 1460.7 + 1465.2 + 1392.3 + 1329.6 = $5,648 Mil.
Total Current Assets was $2,398 Mil.
Total Assets was $24,055 Mil.
Property, Plant and Equipment(Net PPE) was $838 Mil.
Depreciation, Depletion and Amortization(DDA) was $686 Mil.
Selling, General & Admin. Expense(SGA) was $1,899 Mil.
Total Current Liabilities was $4,347 Mil.
Long-Term Debt was $4,654 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)
=(2579.5 / 13259.6) / (1312.7 / 6637.6)
=0.1945383 / 0.19776727
=0.9837

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)
=(5647.8 / 6637.6) / (8364.7 / 13259.6)
=0.85087984 / 0.63084105
=1.3488

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 - (7115.6 + 6496.1) / 66160.1) / (1 - (2398.4 + 837.6) / 24055.3)
=0.79426119 / 0.86547663
=0.9177

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
=13259.6 / 6637.6
=1.9976

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))
=(685.5 / (685.5 + 837.6)) / (1784.3 / (1784.3 + 6496.1))
=0.45006894 / 0.21548476
=2.0886

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)
=(3429.2 / 13259.6) / (1899.1 / 6637.6)
=0.25862017 / 0.28611245
=0.9039

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)
=((19495.9 + 7010.4) / 66160.1) / ((4654 + 4346.6) / 24055.3)
=0.40063875 / 0.37416287
=1.0708

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
=(283.4 - -12.6 - 2728.5) / 66160.1
=-0.0368

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.

Shire PLC has a M-score of -1.51 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.

Shire PLC Annual Data

Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15Dec16
DSRI 1.04750.72121.51991.00431.01860.89581.07010.88241.08911.2264
GMI 0.98921.00760.99311.00520.99910.99621.00761.03190.98631.2764
AQI 1.42221.14470.85750.95951.03090.84760.87741.47861.45850.9713
SGI 1.35611.24050.99521.1541.19791.08881.08991.22051.06551.7761
DEPI 0.82191.15771.01991.17140.95890.98450.9150.81520.75242.3535
SGAI 0.91690.99990.93580.98480.91651.06770.77780.88421.01690.8793
LVGI 1.38130.9040.93710.95120.89120.94460.57891.02051.02881.8081
TATA -0.4452-0.1554-0.0425-0.0696-0.0356-0.0868-0.0954-0.181-0.0625-0.0344
M-score -4.17-3.14-2.23-2.64-2.40-2.96-2.66-3.04-2.49-1.69

Shire PLC Quarterly Data

Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16Dec16Mar17
DSRI 0.88240.85270.90561.10421.08911.0921.81771.37061.22640.9837
GMI 1.03191.01430.98670.98420.98630.98891.07011.25811.27641.3488
AQI 1.47861.1981.15551.17861.45851.06770.95970.97420.97130.9177
SGI 1.22051.19971.15441.08751.06551.07691.20741.48261.77611.9976
DEPI 0.81520.81150.79850.76410.75240.7672.79591.71332.35352.0886
SGAI 0.88420.91660.90630.8591.01690.9490.92640.95310.87930.9039
LVGI 1.02050.90460.95341.00491.02881.3381.54551.62191.80811.0708
TATA -0.181-0.1472-0.1514-0.1476-0.0625-0.0351-0.0186-0.03-0.0344-0.0368
M-score -3.04-3.01-3.07-2.94-2.49-2.60-1.57-1.84-1.69-1.51
Get WordPress Plugins for easy affiliate links on Stock Tickers and Guru Names | Earn affiliate commissions by embedding GuruFocus Charts
GuruFocus Affiliate Program: Earn up to $400 per referral. ( Learn More)
FEEDBACK