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Telefonica SA (NYSE:TEF)
Beneish M-Score
-2.52 (As of Today)

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 -2.44 suggests that the company is not a manipulator.

TEF' s Beneish M-Score Range Over the Past 10 Years
Min: -15.04   Max: -0.68
Current: -2.52

-15.04
-0.68

During the past 13 years, the highest Beneish M-Score of Telefonica SA was -0.68. The lowest was -15.04. And the median was -2.21.


Definition

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 * 1.255+0.528 * 0.9366+0.404 * 1.0185+0.892 * 0.8019+0.115 * 1.1218
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.4559+4.679 * 0.0168-0.327 * 1.0222
=-2.44

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.

This Year (Mar16) TTM:Last Year (Mar15) TTM:
Accounts Receivable was $11,234 Mil.
Revenue was 12208.2405345 + 12344.2265795 + 13590.3479237 + 13540.9652076 = $51,684 Mil.
Gross Profit was 8984.40979955 + 10677.5599129 + 9945.00561167 + 9912.45791246 = $39,519 Mil.
Total Current Assets was $34,561 Mil.
Total Assets was $136,046 Mil.
Property, Plant and Equipment(Net PPE) was $34,019 Mil.
Depreciation, Depletion and Amortization(DDA) was $9,390 Mil.
Selling, General & Admin. Expense(SGA) was $12,077 Mil.
Total Current Liabilities was $34,965 Mil.
Long-Term Debt was $55,212 Mil.
Net Income was 864.142538976 + -1995.64270153 + 992.14365881 + 2122.33445567 = $1,983 Mil.
Non Operating Income was -4.45434298441 + -296.296296296 + -1.12233445567 + -1.12233445567 = $-303 Mil.
Cash Flow from Operations was 0 + 0 + 0 + 0 = $0 Mil.
Accounts Receivable was $11,162 Mil.
Revenue was 12676.4069264 + 16732.4290999 + 17030.9278351 + 18008.1521739 = $64,448 Mil.
Gross Profit was 9366.88311688 + 11700.3699137 + 12087.628866 + 13001.3586957 = $46,156 Mil.
Total Current Assets was $36,158 Mil.
Total Assets was $135,067 Mil.
Property, Plant and Equipment(Net PPE) was $33,144 Mil.
Depreciation, Depletion and Amortization(DDA) was $10,619 Mil.
Selling, General & Admin. Expense(SGA) was $10,344 Mil.
Total Current Liabilities was $34,817 Mil.
Long-Term Debt was $52,763 Mil.



1. DSRI = Days Sales in Receivables Index

Measured as the ratio of days’ sales in receivables in year t to year t-1.

A large increase in DSR could be indicative of revenue inflation.

DSRI=(Receivables_t / Revenue_t) / (Receivables_t-1 / Revenue_t-1)
=(11233.8530067 / 51683.7802454) / (11162.3376623 / 64447.9160352)
=0.21735742 / 0.17319936
=1.255

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.

GMI=GrossMargin_t-1 / GrossMargin_t
=(GrossProfit_t-1 / Revenue_t-1) / (GrossProfit_t / Revenue_t)
=(10677.5599129 / 64447.9160352) / (8984.40979955 / 51683.7802454)
=0.71617895 / 0.76463898
=0.9366

3. AQI = Asset Quality Index

AQI is the ratio of asset quality in year t to year t-1.

Asset quality is measured as the ratio of non-current assets other than plant, property and equipment to total assets.

AQI=(1 - (CurrentAssets_t + PPE_t) / TotalAssets_t) / (1 - (CurrentAssets_t-1 + PPE_t-1) / TotalAssets_t-1)
=(1 - (34561.247216 + 34018.9309577) / 136045.657016) / (1 - (36158.008658 + 33143.9393939) / 135067.099567)
=0.49590322 / 0.48690726
=1.0185

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.

SGI=Sales_t / Sales_t-1
=Revenue_t / Revenue_t-1
=51683.7802454 / 64447.9160352
=0.8019

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))
=(10619.4137376 / (10619.4137376 + 33143.9393939)) / (9390.09018229 / (9390.09018229 + 34018.9309577))
=0.24265539 / 0.21631656
=1.1218

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)
=(12076.9934964 / 51683.7802454) / (10344.0772898 / 64447.9160352)
=0.23367086 / 0.1605029
=1.4559

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)
=((55211.5812918 + 34965.4788419) / 136045.657016) / ((52762.987013 + 34817.0995671) / 135067.099567)
=0.66284409 / 0.6484191
=1.0222

8. TATA = Total Accruals to Total Assets

Total accruals calculated as the change in working capital accounts other than cash less depreciation.

TATA=(IncomefromContinuingOperations_t - CashFlowsfromOperations_t) / TotalAssets_t
=(NetIncome_t - NonOperatingIncome_t - CashFlowsfromOperations_t) / TotalAssets_t
=(1982.97795193 - -302.995308192 - 0) / 136045.657016
=0.0168

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 -2.44 suggests that the company will not be a manipulator.


Related Terms

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


Historical Data

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.

Telefonica SA Annual Data

Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15
DSRI 0.92090.93540.91121.16831.02531.01370.71970.98091.28630.9044
GMI 0.75131.2630.77320.98380.971.02330.99771.01491.0020.9255
AQI 1.22110.98550.99120.94051.16161.00680.94190.92441.0970.9156
SGI 1.55631.17750.98231.05281.03530.96990.99330.94950.79680.8009
DEPI 0.86940.98720.98691.04481.06010.92730.96910.96961.16010.936
SGAI 2.36970.54881.45011.01560.57281.04150.77650.9261.30271.4531
LVGI 1.09880.96131.03480.98060.94851.04120.99750.99510.97281.0143
TATA -0.0855-0.0643-0.0865-0.0729-0.0498-0.0871-0.0725-0.078-0.0685-0.0861
M-score -2.78-2.46-3.20-2.64-2.51-2.92-3.07-2.92-2.70-3.31

Telefonica SA Quarterly Data

Dec13Mar14Jun14Sep14Dec14Mar15Jun15Sep15Dec15Mar16
DSRI 0.99811.1991.10861.25941.17130.86570.96190.9830.95711.255
GMI 1.0151.01451.01071.00251.00180.99540.99430.98810.92890.9366
AQI 0.92440.93830.94221.01141.0970.94250.98630.95550.91561.0185
SGI 0.93320.94080.92380.91320.87510.83330.79440.76910.75680.8019
DEPI 0.98291.00371.09941.12011.07670.94770.99990.97050.9741.1218
SGAI 4.193.22877.5558-2.8511.29922.44441.35831.38951.47261.4559
LVGI 0.99510.99640.97790.9660.97280.98480.96481.03221.01431.0222
TATA 0.04210.0430.04420.04280.03490.04640.04370.04470.02520.0168
M-score -2.92-2.55-3.37-1.43-2.26-2.81-2.55-2.60-2.78-2.44
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