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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 -1.85. The lowest was -3.10. And the median was -2.49.
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 * 1.1583||+||0.528 * 0.9485||+||0.404 * 1.0441||+||0.892 * 1.2074||+||0.115 * 1.0099|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.8796||+||4.679 * 0.0544||-||0.327 * 0.9097|
|This Year (Dec14) TTM:||Last Year (Dec13) TTM:|
|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 $4,357 Mil.
Property, Plant and Equipment(Net PPE) was $992 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 $1,058 Mil.
Net Income was 134.715 + 32.033 + 14.102 + 65.044 = $246 Mil.
Non Operating Income was -1.726 + 0.882 + -0.076 + 1.369 = $0 Mil.
Cash Flow from Operations was 122.349 + -32.418 + -132.043 + 50.472 = $8 Mil.
|Accounts Receivable was $361 Mil.
Revenue was 638.134 + 657.12 + 576.516 + 635.433 = $2,507 Mil.
Gross Profit was 130.668 + 193.23 + 107.861 + 59.313 = $491 Mil.
Total Current Assets was $2,188 Mil.
Total Assets was $3,899 Mil.
Property, Plant and Equipment(Net PPE) was $885 Mil.
Depreciation, Depletion and Amortization(DDA) was $98 Mil.
Selling, General & Admin. Expense(SGA) was $271 Mil.
Total Current Liabilities was $1,660 Mil.
Long-Term Debt was $491 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)|
|=||(504.316 / 3027.265)||/||(360.594 / 2507.203)|
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)|
|=||(108.514 / 2507.203)||/||(259.479 / 3027.265)|
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 - (2402.847 + 991.732) / 4357.182)||/||(1 - (2188.478 + 885.302) / 3898.69)|
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))|
|=||(98.191 / (98.191 + 885.302))||/||(108.795 / (108.795 + 991.732))|
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)|
|=||(288.321 / 3027.265)||/||(271.481 / 2507.203)|
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)|
|=||((1057.762 + 1129.611) / 4357.182)||/||((491.051 + 1660.46) / 3898.69)|
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|
|=||(245.894 - 0.449||-||8.36)||/||4357.182|
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 -1.85 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