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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 Telefonica SA was -0.68. The lowest was -15.04. And the median was -2.21.
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|
|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
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)|
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)|
|=||(10677.5599129 / 64447.9160352)||/||(8984.40979955 / 51683.7802454)|
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 - (34561.247216 + 34018.9309577) / 136045.657016)||/||(1 - (36158.008658 + 33143.9393939) / 135067.099567)|
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))|
|=||(10619.4137376 / (10619.4137376 + 33143.9393939))||/||(9390.09018229 / (9390.09018229 + 34018.9309577))|
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)|
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)|
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|
|=||(1982.97795193 - -302.995308192||-||0)||/||136045.657016|
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.
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