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GuruFocus has detected 1 Warning Sign with VIVUS Inc $VVUS.
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VIVUS Inc (NAS:VVUS)
Beneish M-Score
-2.32 (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.

VIVUS Inc has a M-score of -2.32 suggests that the company is not a manipulator.

VVUS' s Beneish M-Score Range Over the Past 10 Years
Min: -10000000   Max: 178.22
Current: -2.32

-10000000
178.22

During the past 13 years, the highest Beneish M-Score of VIVUS Inc was 178.22. The lowest was -10000000.00. And the median was -2.45.


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 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 * 0.558+0.528 * 0.7126+0.404 * 0.4997+0.892 * 1.7299+0.115 * 1.015
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.4132+4.679 * 0.0276-0.327 * 0.8822
=-2.32

* 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 $11.4 Mil.
Revenue was 27.012 + 81.805 + 13.353 + 13.776 = $135.9 Mil.
Gross Profit was 20.845 + 79.619 + 11.288 + 11.129 = $122.9 Mil.
Total Current Assets was $293.4 Mil.
Total Assets was $295.5 Mil.
Property, Plant and Equipment(Net PPE) was $0.7 Mil.
Depreciation, Depletion and Amortization(DDA) was $1.0 Mil.
Selling, General & Admin. Expense(SGA) was $48.7 Mil.
Total Current Liabilities was $36.0 Mil.
Long-Term Debt was $234.9 Mil.
Net Income was -1.056 + 56.563 + -9.152 + -11.401 = $35.0 Mil.
Non Operating Income was -16.604 + 0.575 + 0 + 0 = $-16.0 Mil.
Cash Flow from Operations was -7.072 + -10.424 + 65.924 + -5.597 = $42.8 Mil.
Accounts Receivable was $11.9 Mil.
Revenue was 15.324 + 15.343 + 24.936 + 22.985 = $78.6 Mil.
Gross Profit was 11.62 + 12.717 + 13.171 + 13.115 = $50.6 Mil.
Total Current Assets was $256.4 Mil.
Total Assets was $259.7 Mil.
Property, Plant and Equipment(Net PPE) was $0.9 Mil.
Depreciation, Depletion and Amortization(DDA) was $1.3 Mil.
Selling, General & Admin. Expense(SGA) was $68.1 Mil.
Total Current Liabilities was $51.1 Mil.
Long-Term Debt was $218.8 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)
=(11.443 / 135.946) / (11.855 / 78.588)
=0.08417313 / 0.15085
=0.558

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)
=(50.623 / 78.588) / (122.881 / 135.946)
=0.64415687 / 0.90389566
=0.7126

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 - (293.368 + 0.738) / 295.485) / (1 - (256.424 + 0.884) / 259.734)
=0.0046669 / 0.00934033
=0.4997

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
=135.946 / 78.588
=1.7299

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))
=(1.293 / (1.293 + 0.884)) / (1.041 / (1.041 + 0.738))
=0.59393661 / 0.5851602
=1.015

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)
=(48.688 / 135.946) / (68.109 / 78.588)
=0.3581422 / 0.86665903
=0.4132

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)
=((234.866 + 36.036) / 295.485) / ((218.782 + 51.131) / 259.734)
=0.91680458 / 1.03919009
=0.8822

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
=(34.954 - -16.029 - 42.831) / 295.485
=0.0276

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 Inc has a M-score of -2.32 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.

VIVUS Inc Annual Data

Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15Dec16
DSRI 0.30390.529301123.0250.10910.67410.92840.8091
GMI 0.39550.8821.03681.058510.88710.9651.32841.1020.702
AQI 0.39162.80872.8309000.325612.57641.42680.4840.5385
SGI 3.17181.8690.3615000.136640.29921.40820.83581.3021
DEPI 0.87810.87640.64590.5842-0.1351-0.26770.36690.73480.77661.0076
SGAI 0.37570.58212.47082.4731148.16950.0360.49830.85160.5067
LVGI 1.8210.67920.45360.51860.39320.85023.93541.21611.33590.921
TATA -0.63330.25070.18690.0392-0.0639-0.0317-0.089-0.0758-0.17050.0029
M-score -4.89-0.13-2.45-3.71-4.018.3235.13-2.44-3.75-2.60

VIVUS Inc Quarterly Data

Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16Dec16Mar17
DSRI 0.67410.39060.9060.73690.92841.41241.71911.21770.80910.558
GMI 1.32841.26651.25861.34551.1021.07460.9550.73720.7020.7126
AQI 1.42681.37111.37750.90540.4840.51260.48010.30670.53850.4997
SGI 1.40820.96480.85190.74590.83580.71670.62640.56761.30211.7299
DEPI 0.73480.69970.65580.6670.77660.87420.90990.94541.00761.015
SGAI 0.49830.79330.9211.02330.85160.86920.92141.0070.50670.4132
LVGI 1.21611.2331.34781.36351.33591.33081.19531.14990.9210.8822
TATA -0.0758-0.1163-0.2098-0.203-0.1705-0.10730.0263-0.2330.00290.0276
M-score -2.44-3.40-3.53-3.92-3.75-3.11-2.32-4.23-2.60-2.32
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