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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.
Telefonica SA has a M-score of -2.25 suggests that the company is not a manipulator.
During the past 13 years, the highest Beneish M-Score of Telefonica SA was -0.71. The lowest was -15.66. And the median was -2.81.
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 Telefonica SA 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 * 1.2594||+||0.528 * 1.0025||+||0.404 * 1.0114||+||0.892 * 0.9132||+||0.115 * 1.1201|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * -2.851||+||4.679 * -0.1329||-||0.327 * 0.966|
|This Year (Sep14) TTM:||Last Year (Sep13) TTM:|
|Accounts Receivable was $15,081 Mil.|
Revenue was 17030.9278351 + 18008.1521739 + 17142.461964 + 21329.218107 = $73,511 Mil.
Gross Profit was 12087.628866 + 13001.3586957 + 12190.8713693 + 15297.6680384 = $52,578 Mil.
Total Current Assets was $35,500 Mil.
Total Assets was $155,238 Mil.
Property, Plant and Equipment(Net PPE) was $41,138 Mil.
Depreciation, Depletion and Amortization(DDA) was $11,485 Mil.
Selling, General & Admin. Expense(SGA) was $9,072 Mil.
Total Current Liabilities was $36,081 Mil.
Long-Term Debt was $65,258 Mil.
Net Income was 1219.07216495 + 1645.38043478 + 957.123098202 + 1986.28257888 = $5,808 Mil.
Non Operating Income was -11.5979381443 + -328.804347826 + 1.38312586445 + -489.711934156 = $-829 Mil.
Cash Flow from Operations was 0 + 7584.23913043 + 0 + 19676.2688615 = $27,261 Mil.
|Accounts Receivable was $13,112 Mil.
Revenue was 19022.6969292 + 19846.9656992 + 18554.4041451 + 23069.5538058 = $80,494 Mil.
Gross Profit was 13411.2149533 + 14236.1477573 + 13129.5336788 + 16939.6325459 = $57,717 Mil.
Total Current Assets was $39,865 Mil.
Total Assets was $161,806 Mil.
Property, Plant and Equipment(Net PPE) was $40,943 Mil.
Depreciation, Depletion and Amortization(DDA) was $13,249 Mil.
Selling, General & Admin. Expense(SGA) was $-3,484 Mil.
Total Current Liabilities was $41,101 Mil.
Long-Term Debt was $68,242 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)|
|=||(15081.185567 / 73510.76008)||/||(13112.1495327 / 80493.6205793)|
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)|
|=||(13001.3586957 / 80493.6205793)||/||(12087.628866 / 73510.76008)|
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 - (35500 + 41137.8865979) / 155238.402062)||/||(1 - (39865.1535381 + 40942.5901202) / 161806.408545)|
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))|
|=||(13248.5602661 / (13248.5602661 + 40942.5901202))||/||(11485.2913403 / (11485.2913403 + 41137.8865979))|
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)|
|=||(9071.75524492 / 73510.76008)||/||(-3484.25639087 / 80493.6205793)|
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)|
|=||((65257.7319588 + 36081.185567) / 155238.402062)||/||((68241.6555407 + 41101.4686248) / 161806.408545)|
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|
|=||(5807.85827681 - -828.731094262||-||27260.5079919)||/||155238.402062|
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.
Telefonica SA has a M-score of -2.25 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
Telefonica SA Annual Data
Telefonica SA Quarterly Data