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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 -2.36.
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 * 0.7103||+||0.528 * 2.0909||+||0.404 * 0.9605||+||0.892 * 1.6236||+||0.115 * 1.0459|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.5866||+||4.679 * -0.0251||-||0.327 * 1.12|
* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.
|This Year (Dec16) TTM:||Last Year (Dec15) TTM:|
|Accounts Receivable was $220 Mil.|
Revenue was 1024.889 + 729.346 + 420.452 + 384.875 = $2,560 Mil.
Gross Profit was -32.073 + 129.208 + 41.294 + 51.537 = $190 Mil.
Total Current Assets was $1,915 Mil.
Total Assets was $4,567 Mil.
Property, Plant and Equipment(Net PPE) was $1,682 Mil.
Depreciation, Depletion and Amortization(DDA) was $174 Mil.
Selling, General & Admin. Expense(SGA) was $329 Mil.
Total Current Liabilities was $1,090 Mil.
Long-Term Debt was $1,799 Mil.
Net Income was -275.118 + -40.545 + -69.992 + -85.409 = $-471 Mil.
Non Operating Income was 8.184 + -40.228 + -5.822 + -6.232 = $-44 Mil.
Cash Flow from Operations was 486.055 + -128.346 + -300.091 + -369.901 = $-312 Mil.
|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 $1,268 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 $1,745 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)|
|=||(219.638 / 2559.562)||/||(190.448 / 1576.473)|
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)|
|=||(244.646 / 1576.473)||/||(189.966 / 2559.562)|
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 - (1914.699 + 1681.904) / 4567.167)||/||(1 - (2514.52 + 1267.822) / 4856.993)|
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))|
|=||(138.007 / (138.007 + 1267.822))||/||(174.209 / (174.209 + 1681.904))|
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)|
|=||(329.061 / 2559.562)||/||(345.486 / 1576.473)|
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)|
|=||((1798.97 + 1090.175) / 4567.167)||/||((1744.583 + 998.602) / 4856.993)|
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|
|=||(-471.064 - -44.098||-||-312.283)||/||4567.167|
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 -1.71 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