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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 -1.98.
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 * 0.6001||+||0.528 * 0.82||+||0.404 * 1.2402||+||0.892 * 1.156||+||0.115 * 0.9548|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9787||+||4.679 * 0.0106||-||0.327 * 0.9633|
|This Year (Sep15) TTM:||Last Year (Sep14) TTM:|
|Accounts Receivable was $570 Mil.|
Revenue was 1271.245 + 896.217 + 469.209 + 1008.62 = $3,645 Mil.
Gross Profit was 484.365 + 164.483 + 38.981 + 310.546 = $998 Mil.
Total Current Assets was $3,251 Mil.
Total Assets was $7,061 Mil.
Property, Plant and Equipment(Net PPE) was $1,423 Mil.
Depreciation, Depletion and Amortization(DDA) was $257 Mil.
Selling, General & Admin. Expense(SGA) was $283 Mil.
Total Current Liabilities was $896 Mil.
Long-Term Debt was $247 Mil.
Net Income was 349.318 + 94.49 + -62.292 + 194.272 = $576 Mil.
Non Operating Income was -3.481 + -3.144 + -2.855 + -3.33 = $-13 Mil.
Cash Flow from Operations was 21.002 + -17.103 + -417.915 + 927.996 = $514 Mil.
|Accounts Receivable was $822 Mil.
Revenue was 890.288 + 544.353 + 950.158 + 768.437 = $3,153 Mil.
Gross Profit was 189.402 + 92.725 + 236.711 + 189.296 = $708 Mil.
Total Current Assets was $3,253 Mil.
Total Assets was $6,440 Mil.
Property, Plant and Equipment(Net PPE) was $1,432 Mil.
Depreciation, Depletion and Amortization(DDA) was $245 Mil.
Selling, General & Admin. Expense(SGA) was $250 Mil.
Total Current Liabilities was $919 Mil.
Long-Term Debt was $164 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)|
|=||(570.046 / 3645.291)||/||(821.696 / 3153.236)|
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)|
|=||(164.483 / 3153.236)||/||(484.365 / 3645.291)|
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 - (3251.329 + 1423.474) / 7060.642)||/||(1 - (3253.026 + 1432.33) / 6439.954)|
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))|
|=||(244.525 / (244.525 + 1432.33))||/||(256.582 / (256.582 + 1423.474))|
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)|
|=||(283.34 / 3645.291)||/||(250.417 / 3153.236)|
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)|
|=||((246.814 + 896.287) / 7060.642)||/||((163.646 + 918.672) / 6439.954)|
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|
|=||(575.788 - -12.81||-||513.98)||/||7060.642|
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 -2.65 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