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Telefonica SA (NYSE:TEF)
Beneish M-Score
-2.36 (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 -2.52 suggests that the company is not a manipulator.

TEF' s 10-Year Beneish M-Score Range
Min: -14.96   Max: -0.71
Current: -2.36

-14.96
-0.71

During the past 13 years, the highest Beneish M-Score of Telefonica SA was -0.71. The lowest was -14.96. 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 * 0.8827+0.528 * 1.0049+0.404 * 0.9863+0.892 * 0.8657+0.115 * 0.938
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0915+4.679 * 0.0437-0.327 * 0.9648
=-2.52

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

This Year (Jun15) TTM:Last Year (Jun14) TTM:
Accounts Receivable was $12,195 Mil.
Revenue was 13540.9652076 + 12676.4069264 + 16732.4290999 + 17030.9278351 = $59,981 Mil.
Gross Profit was 9912.45791246 + 9366.88311688 + 11700.3699137 + 12087.628866 = $43,067 Mil.
Total Current Assets was $36,914 Mil.
Total Assets was $146,620 Mil.
Property, Plant and Equipment(Net PPE) was $36,444 Mil.
Depreciation, Depletion and Amortization(DDA) was $10,213 Mil.
Selling, General & Admin. Expense(SGA) was $9,972 Mil.
Total Current Liabilities was $40,759 Mil.
Long-Term Debt was $53,646 Mil.
Net Income was 2122.33445567 + 1950.21645022 + 187.422934649 + 1219.07216495 = $5,479 Mil.
Non Operating Income was -1.12233445567 + -3.24675324675 + -917.38594328 + -11.5979381443 = $-933 Mil.
Cash Flow from Operations was 0 + 0 + 0 + 0 = $0 Mil.
Accounts Receivable was $15,959 Mil.
Revenue was 14559.7826087 + 14374.8271093 + 21329.218107 + 19022.6969292 = $69,287 Mil.
Gross Profit was 10691.576087 + 10594.7441217 + 15297.6680384 + 13411.2149533 = $49,995 Mil.
Total Current Assets was $36,516 Mil.
Total Assets was $159,564 Mil.
Property, Plant and Equipment(Net PPE) was $42,208 Mil.
Depreciation, Depletion and Amortization(DDA) was $10,905 Mil.
Selling, General & Admin. Expense(SGA) was $10,553 Mil.
Total Current Liabilities was $38,071 Mil.
Long-Term Debt was $68,423 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)
=(12195.2861953 / 59980.729069) / (15959.2391304 / 69286.5247542)
=0.20332007 / 0.23033684
=0.8827

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)
=(9366.88311688 / 69286.5247542) / (9912.45791246 / 59980.729069)
=0.72157181 / 0.71801961
=1.0049

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 - (36913.5802469 + 36444.4444444) / 146619.52862) / (1 - (36516.3043478 + 42207.8804348) / 159563.858696)
=0.49967085 / 0.50662897
=0.9863

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
=59980.729069 / 69286.5247542
=0.8657

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))
=(10904.8658982 / (10904.8658982 + 42207.8804348)) / (10212.9624494 / (10212.9624494 + 36444.4444444))
=0.20531542 / 0.21889263
=0.938

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)
=(9972.33297466 / 59980.729069) / (10553.3827897 / 69286.5247542)
=0.16625895 / 0.15231508
=1.0915

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)
=((53646.4646465 + 40758.698092) / 146619.52862) / ((68422.5543478 + 38070.6521739) / 159563.858696)
=0.6438785 / 0.6674018
=0.9648

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
=(5479.04600548 - -933.352969127 - 0) / 146619.52862
=0.0437

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 -2.52 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

Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14
DSRI 0.86410.88260.8970.97851.16831.07280.72150.96630.98091.2863
GMI 1.01811.05440.98541.00420.98380.971.02330.99771.01491.002
AQI 0.9611.22110.98550.99120.94051.16161.00680.94190.92451.097
SGI 1.10981.62391.2280.91471.05281.03530.96990.99330.94950.7968
DEPI 1.00870.86680.98840.98571.04481.06010.92730.96920.96961.1601
SGAI 0.96570.84150.95220.95580.54550.8221.35140.77651.09171.105
LVGI 1.17621.09880.96131.03480.98060.94851.04120.99750.99510.9728
TATA -0.1113-0.0855-0.0642-0.0865-0.0729-0.0498-0.0871-0.0725-0.078-0.0685
M-score -3.08-2.33-2.67-2.99-2.56-2.51-3.24-2.85-2.95-2.67

Telefonica SA Quarterly Data

Mar13Jun13Sep13Dec13Mar14Jun14Sep14Dec14Mar15Jun15
DSRI 0.99221.17350.95070.99811.24351.2081.37581.28740.88190.8827
GMI 0.99510.99981.00811.0151.00740.99990.99140.99040.99881.0049
AQI 0.98950.96910.91660.92450.93830.94221.01141.0970.94250.9863
SGI 0.9210.93880.94290.93320.90710.84770.8360.79610.8180.8657
DEPI 0.99740.97720.94050.98281.03251.17191.19651.15220.95390.938
SGAI 0.42121.5273-9.06611.07531.90961.21031.25891.1451.12921.0915
LVGI 0.97780.98940.97880.99510.99640.97790.9660.97280.98480.9648
TATA -0.1085-0.1343-0.1334-0.0097-0.01150.04170.04020.03230.04350.0437
M-score -2.97-3.11-1.50-2.62-2.57-2.26-2.10-2.21-2.59-2.52
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