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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 0.34. The lowest was -3.68. 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 * 1.3399||+||0.528 * 1.6106||+||0.404 * 0.6633||+||0.892 * 0.8067||+||0.115 * 1.2232|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.4519||+||4.679 * 0.1623||-||0.327 * 1.2358|
|This Year (Sep16) TTM:||Last Year (Sep15) TTM:|
|Accounts Receivable was $224 Mil.|
Revenue was 729.346 + 420.452 + 384.875 + 374.364 = $1,909 Mil.
Gross Profit was 129.208 + 41.294 + 51.537 + 20.303 = $242 Mil.
Total Current Assets was $2,346 Mil.
Total Assets was $5,097 Mil.
Property, Plant and Equipment(Net PPE) was $1,855 Mil.
Depreciation, Depletion and Amortization(DDA) was $163 Mil.
Selling, General & Admin. Expense(SGA) was $368 Mil.
Total Current Liabilities was $1,443 Mil.
Long-Term Debt was $1,737 Mil.
Net Income was -40.545 + -69.992 + -85.409 + -127.621 = $-324 Mil.
Non Operating Income was -40.228 + -5.822 + -6.232 + -3.102 = $-55 Mil.
Cash Flow from Operations was -128.346 + -300.091 + -369.901 + -296.871 = $-1,095 Mil.
|Accounts Receivable was $207 Mil.
Revenue was 380.218 + 381.02 + 440.871 + 1164.238 = $2,366 Mil.
Gross Profit was 62.644 + 70.881 + 90.818 + 259.479 = $484 Mil.
Total Current Assets was $2,039 Mil.
Total Assets was $4,394 Mil.
Property, Plant and Equipment(Net PPE) was $1,192 Mil.
Depreciation, Depletion and Amortization(DDA) was $131 Mil.
Selling, General & Admin. Expense(SGA) was $314 Mil.
Total Current Liabilities was $1,106 Mil.
Long-Term Debt was $1,113 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)|
|=||(223.836 / 1909.037)||/||(207.073 / 2366.347)|
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)|
|=||(483.822 / 2366.347)||/||(242.342 / 1909.037)|
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 - (2346.186 + 1855.051) / 5096.67)||/||(1 - (2038.652 + 1191.67) / 4394.325)|
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))|
|=||(131.04 / (131.04 + 1191.67))||/||(163.48 / (163.48 + 1855.051))|
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)|
|=||(368.187 / 1909.037)||/||(314.343 / 2366.347)|
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)|
|=||((1736.861 + 1443.167) / 5096.67)||/||((1113.012 + 1105.553) / 4394.325)|
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|
|=||(-323.567 - -55.384||-||-1095.209)||/||5096.67|
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 -1.52 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
SunPower Corp Annual Data
SunPower Corp Quarterly Data