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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 -2.47.
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 * 0.6924||+||0.528 * 1.4749||+||0.404 * 1.4152||+||0.892 * 0.5478||+||0.115 * 0.6102|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 2.2917||+||4.679 * 0.1485||-||0.327 * 1.2223|
|This Year (Mar16) TTM:||Last Year (Mar15) TTM:|
|Accounts Receivable was $177 Mil.|
Revenue was 384.875 + 374.364 + 380.218 + 381.02 = $1,520 Mil.
Gross Profit was 51.537 + 20.303 + 62.644 + 70.881 = $205 Mil.
Total Current Assets was $2,374 Mil.
Total Assets was $4,835 Mil.
Property, Plant and Equipment(Net PPE) was $809 Mil.
Depreciation, Depletion and Amortization(DDA) was $152 Mil.
Selling, General & Admin. Expense(SGA) was $366 Mil.
Total Current Liabilities was $1,055 Mil.
Long-Term Debt was $1,765 Mil.
Net Income was -85.409 + -127.621 + -56.326 + 6.509 = $-263 Mil.
Non Operating Income was -6.232 + -3.102 + -3.601 + 14.982 = $2 Mil.
Cash Flow from Operations was -369.901 + -296.871 + -103.919 + -212.033 = $-983 Mil.
|Accounts Receivable was $468 Mil.
Revenue was 440.871 + 1164.238 + 662.734 + 507.871 = $2,776 Mil.
Gross Profit was 90.818 + 259.479 + 108.514 + 94.145 = $553 Mil.
Total Current Assets was $2,061 Mil.
Total Assets was $4,103 Mil.
Property, Plant and Equipment(Net PPE) was $1,051 Mil.
Depreciation, Depletion and Amortization(DDA) was $112 Mil.
Selling, General & Admin. Expense(SGA) was $292 Mil.
Total Current Liabilities was $837 Mil.
Long-Term Debt was $1,121 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)|
|=||(177.443 / 1520.477)||/||(467.868 / 2775.714)|
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)|
|=||(552.956 / 2775.714)||/||(205.365 / 1520.477)|
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 - (2373.9 + 808.844) / 4834.855)||/||(1 - (2061.397 + 1051.047) / 4103.141)|
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))|
|=||(111.987 / (111.987 + 1051.047))||/||(151.561 / (151.561 + 808.844))|
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)|
|=||(366.063 / 1520.477)||/||(291.607 / 2775.714)|
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)|
|=||((1765.293 + 1054.545) / 4834.855)||/||((1121.139 + 836.709) / 4103.141)|
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|
|=||(-262.847 - 2.047||-||-982.724)||/||4834.855|
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 -2.39 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