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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 SunPower Corp was -1.06. The lowest was -3.10. And the median was -2.46.
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 SunPower Corp 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 * 0.7252||+||0.528 * 1.3307||+||0.404 * 1.0709||+||0.892 * 0.5208||+||0.115 * 0.9713|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 2.301||+||4.679 * 0.1099||-||0.327 * 1.1371|
|This Year (Dec15) TTM:||Last Year (Dec14) TTM:|
|Accounts Receivable was $190 Mil.|
Revenue was 374.364 + 380.218 + 381.02 + 440.871 = $1,576 Mil.
Gross Profit was 20.303 + 62.644 + 70.881 + 90.818 = $245 Mil.
Total Current Assets was $2,515 Mil.
Total Assets was $4,857 Mil.
Property, Plant and Equipment(Net PPE) was $736 Mil.
Depreciation, Depletion and Amortization(DDA) was $138 Mil.
Selling, General & Admin. Expense(SGA) was $345 Mil.
Total Current Liabilities was $999 Mil.
Long-Term Debt was $1,590 Mil.
Net Income was -127.621 + -56.326 + 6.509 + -9.581 = $-187 Mil.
Non Operating Income was -3.102 + -3.601 + 14.982 + -2.62 = $6 Mil.
Cash Flow from Operations was -296.871 + -103.919 + -212.033 + -113.408 = $-726 Mil.
|Accounts Receivable was $504 Mil.
Revenue was 1164.238 + 662.734 + 507.871 + 692.422 = $3,027 Mil.
Gross Profit was 259.479 + 108.514 + 94.145 + 162.989 = $625 Mil.
Total Current Assets was $2,403 Mil.
Total Assets was $4,346 Mil.
Property, Plant and Equipment(Net PPE) was $601 Mil.
Depreciation, Depletion and Amortization(DDA) was $109 Mil.
Selling, General & Admin. Expense(SGA) was $288 Mil.
Total Current Liabilities was $1,130 Mil.
Long-Term Debt was $907 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)|
|=||(190.448 / 1576.473)||/||(504.316 / 3027.265)|
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)|
|=||(62.644 / 3027.265)||/||(20.303 / 1576.473)|
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 - (2514.52 + 736.302) / 4856.993)||/||(1 - (2402.847 + 600.819) / 4345.582)|
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))|
|=||(108.795 / (108.795 + 600.819))||/||(138.007 / (138.007 + 736.302))|
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)|
|=||(345.486 / 1576.473)||/||(288.321 / 3027.265)|
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)|
|=||((1589.908 + 998.602) / 4856.993)||/||((907.136 + 1129.611) / 4345.582)|
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|
|=||(-187.019 - 5.659||-||-726.231)||/||4856.993|
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.
SunPower Corp has a M-score of -2.71 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
SunPower Corp Annual Data
SunPower Corp Quarterly Data