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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 3.01. The lowest was -3.85. And the median was -1.97.
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 * 0.8683||+||0.528 * 0.734||+||0.404 * 1.1186||+||0.892 * 1.2245||+||0.115 * 1.2023|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.6967||+||4.679 * 0.082||-||0.327 * 0.8572|
|This Year (Jun16) TTM:||Last Year (Jun15) TTM:|
|Accounts Receivable was $369 Mil.|
Revenue was 934.381 + 848.484 + 942.324 + 1271.245 = $3,996 Mil.
Gross Profit was 191.165 + 262.945 + 231.438 + 484.365 = $1,170 Mil.
Total Current Assets was $3,077 Mil.
Total Assets was $7,544 Mil.
Property, Plant and Equipment(Net PPE) was $1,679 Mil.
Depreciation, Depletion and Amortization(DDA) was $244 Mil.
Selling, General & Admin. Expense(SGA) was $251 Mil.
Total Current Liabilities was $952 Mil.
Long-Term Debt was $162 Mil.
Net Income was 13.408 + 170.565 + 164.135 + 349.318 = $697 Mil.
Non Operating Income was 4.03 + 32.313 + -3.66 + -3.481 = $29 Mil.
Cash Flow from Operations was -75.275 + 50.494 + 53.097 + 21.002 = $49 Mil.
|Accounts Receivable was $347 Mil.
Revenue was 896.217 + 469.209 + 1007.993 + 890.288 = $3,264 Mil.
Gross Profit was 164.483 + 38.981 + 308.382 + 189.402 = $701 Mil.
Total Current Assets was $3,156 Mil.
Total Assets was $6,804 Mil.
Property, Plant and Equipment(Net PPE) was $1,399 Mil.
Depreciation, Depletion and Amortization(DDA) was $252 Mil.
Selling, General & Admin. Expense(SGA) was $294 Mil.
Total Current Liabilities was $914 Mil.
Long-Term Debt was $258 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)|
|=||(369.135 / 3996.434)||/||(347.186 / 3263.707)|
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)|
|=||(701.248 / 3263.707)||/||(1169.913 / 3996.434)|
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 - (3076.621 + 1679.026) / 7544.02)||/||(1 - (3156.206 + 1399.464) / 6803.805)|
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))|
|=||(251.643 / (251.643 + 1399.464))||/||(243.747 / (243.747 + 1679.026))|
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)|
|=||(251.135 / 3996.434)||/||(294.36 / 3263.707)|
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)|
|=||((161.839 + 952.029) / 7544.02)||/||((257.787 + 914.107) / 6803.805)|
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|
|=||(697.426 - 29.202||-||49.318)||/||7544.02|
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 -1.99 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