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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.
During the past 13 years, the highest Beneish M-Score of First Solar Inc was 0.23. The lowest was -3.20. And the median was -1.70.
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 First Solar 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 * 0.3151||+||0.528 * 1.0692||+||0.404 * 1.2515||+||0.892 * 1.025||+||0.115 * 0.9977|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9254||+||4.679 * -0.041||-||0.327 * 0.6818|
|This Year (Dec14) TTM:||Last Year (Dec13) TTM:|
|Accounts Receivable was $212 Mil.|
Revenue was 1007.993 + 889.31 + 544.353 + 950.158 = $3,392 Mil.
Gross Profit was 308.382 + 189.287 + 92.725 + 236.711 = $827 Mil.
Total Current Assets was $3,190 Mil.
Total Assets was $6,724 Mil.
Property, Plant and Equipment(Net PPE) was $1,449 Mil.
Depreciation, Depletion and Amortization(DDA) was $246 Mil.
Selling, General & Admin. Expense(SGA) was $259 Mil.
Total Current Liabilities was $1,001 Mil.
Long-Term Debt was $165 Mil.
Net Income was 191.959 + 88.424 + 4.528 + 112.007 = $397 Mil.
Non Operating Income was 3.906 + -6.652 + -3.149 + -2.325 = $-8 Mil.
Cash Flow from Operations was 927.996 + -47.211 + 118.38 + -318.176 = $681 Mil.
|Accounts Receivable was $658 Mil.
Revenue was 768.437 + 1265.587 + 519.76 + 755.205 = $3,309 Mil.
Gross Profit was 189.296 + 364.034 + 140.098 + 169.326 = $863 Mil.
Total Current Assets was $3,793 Mil.
Total Assets was $6,884 Mil.
Property, Plant and Equipment(Net PPE) was $1,385 Mil.
Depreciation, Depletion and Amortization(DDA) was $234 Mil.
Selling, General & Admin. Expense(SGA) was $273 Mil.
Total Current Liabilities was $1,588 Mil.
Long-Term Debt was $163 Mil.
1. DSRI = Days Sales in Receivables Index
A large increase in DSR could be indicative of revenue inflation.
|DSRI||=||(Receivables_t / Revenue_t)||/||(Receivables_t-1 / Revenue_t-1)|
|=||(212.405 / 3391.814)||/||(657.706 / 3308.989)|
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.
|=||(GrossProfit_t-1 / Revenue_t-1)||/||(GrossProfit_t / Revenue_t)|
|=||(189.287 / 3308.989)||/||(308.382 / 3391.814)|
3. AQI = Asset Quality Index
AQI is the ratio of asset quality in year t to year t-1.
|AQI||=||(1 - (CurrentAssets_t + PPE_t) / TotalAssets_t)||/||(1 - (CurrentAssets_t-1 + PPE_t-1) / TotalAssets_t-1)|
|=||(1 - (3190.466 + 1448.697) / 6724.439)||/||(1 - (3792.764 + 1385.084) / 6883.502)|
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.
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))|
|=||(234.37 / (234.37 + 1385.084))||/||(245.798 / (245.798 + 1448.697))|
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)|
|=||(258.973 / 3391.814)||/||(273.029 / 3308.989)|
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)|
|=||((165.003 + 1001.096) / 6724.439)||/||((162.78 + 1588.061) / 6883.502)|
8. TATA = Total Accruals to Total Assets
Total accruals calculated as the change in working capital accounts other than cash less depreciation.
|=||(NetIncome_t - NonOperatingIncome_t||-||CashFlowsfromOperations_t)||/||TotalAssets_t|
|=||(396.918 - -8.22||-||680.989)||/||6724.439|
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.
First Solar Inc has a M-score of -3.02 suggests that the company will not be a manipulator.
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
First Solar Inc Annual Data
First Solar Inc Quarterly Data