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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.
First Solar Inc has a M-score of -2.02 signals that the company is a manipulator.
During the past 13 years, the highest Beneish M-Score of First Solar Inc was 2.93. The lowest was -3.81. And the median was -2.12.
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 * 1.1111||+||0.528 * 1.0549||+||0.404 * 1.2321||+||0.892 * 1.1064||+||0.115 * 0.8978|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.785||+||4.679 * 0.0031||-||0.327 * 0.6818|
|This Year (Jun14) TTM:||Last Year (Jun13) TTM:|
|Accounts Receivable was $803 Mil.|
Revenue was 544.353 + 950.158 + 768.437 + 1265.587 = $3,529 Mil.
Gross Profit was 92.725 + 236.711 + 189.296 + 364.034 = $883 Mil.
Total Current Assets was $3,170 Mil.
Total Assets was $6,612 Mil.
Property, Plant and Equipment(Net PPE) was $1,418 Mil.
Depreciation, Depletion and Amortization(DDA) was $245 Mil.
Selling, General & Admin. Expense(SGA) was $246 Mil.
Total Current Liabilities was $1,211 Mil.
Long-Term Debt was $134 Mil.
Net Income was 4.528 + 112.007 + 65.26 + 195.038 = $377 Mil.
Non Operating Income was -3.149 + -2.325 + -2.263 + -3.138 = $-11 Mil.
Cash Flow from Operations was 118.38 + -318.176 + 192.206 + 375.092 = $368 Mil.
|Accounts Receivable was $653 Mil.
Revenue was 519.76 + 755.205 + 1075.011 + 839.147 = $3,189 Mil.
Gross Profit was 140.098 + 169.326 + 293.547 + 238.716 = $842 Mil.
Total Current Assets was $3,601 Mil.
Total Assets was $6,868 Mil.
Property, Plant and Equipment(Net PPE) was $1,561 Mil.
Depreciation, Depletion and Amortization(DDA) was $238 Mil.
Selling, General & Admin. Expense(SGA) was $284 Mil.
Total Current Liabilities was $1,855 Mil.
Long-Term Debt was $195 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)|
|=||(802.811 / 3528.535)||/||(653.018 / 3189.123)|
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)|
|=||(236.711 / 3189.123)||/||(92.725 / 3528.535)|
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 - (3170.269 + 1418.206) / 6612.015)||/||(1 - (3601.279 + 1560.908) / 6868.126)|
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))|
|=||(237.547 / (237.547 + 1560.908))||/||(244.622 / (244.622 + 1418.206))|
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)|
|=||(246.353 / 3528.535)||/||(283.654 / 3189.123)|
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)|
|=||((133.836 + 1211.243) / 6612.015)||/||((194.57 + 1854.795) / 6868.126)|
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|
|=||(376.833 - -10.875||-||367.502)||/||6612.015|
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 -2.02 signals that the company is likely to 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