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Telefonica SA (NYSE:TEF)
Beneish M-Score
-2.49 (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: -2.49

-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 -2.16.


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 * 1.0788+0.528 * 0.9993+0.404 * 1.0185+0.892 * 0.9329+0.115 * 1.0363
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.3338+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 + 14092.4784217 + 14072.1649485 + 14559.7826087 = $55,401 Mil.
Gross Profit was 9366.88311688 + 11892.7250308 + 10380.1546392 + 10691.576087 = $42,331 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 $9,577 Mil.
Selling, General & Admin. Expense(SGA) was $9,706 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 / 55400.8329053)
=0.21735742 / 0.20148321
=1.0788

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)
=(42331.3388738 / 55400.8329053) / (39519.4332365 / 51683.7802454)
=0.7640921 / 0.76463898
=0.9993

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 / 55400.8329053
=0.9329

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))
=(9576.6693938 / (9576.6693938 + 33143.9393939)) / (9390.09018229 / (9390.09018229 + 34018.9309577))
=0.22416978 / 0.21631656
=1.0363

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) / (9705.64688198 / 55400.8329053)
=0.23367086 / 0.17518955
=1.3338

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 0.89440.8970.97851.16831.07280.72150.96631.14021.32620.7546
GMI 0.74150.98541.00420.98380.971.02330.99770.95150.99040.9987
AQI 1.22110.98550.99120.94051.16161.00680.94190.92451.09980.9132
SGI 1.60251.2280.91471.05281.03530.96990.99330.81690.77280.9599
DEPI 0.86940.98840.98571.04481.06010.92730.96921.05641.18670.8398
SGAI 2.0720.95220.95581.01560.44151.35140.9150.98531.14771.3155
LVGI 1.09880.96131.03480.98060.94851.04120.99750.99510.97251.0146
TATA -0.0855-0.0642-0.0865-0.0729-0.0498-0.0871-0.0725-0.0782-0.0686-0.0861
M-score -2.72-2.67-2.99-2.64-2.45-3.24-2.87-2.93-2.66-3.26

Telefonica SA Quarterly Data

Dec13Mar14Jun14Sep14Dec14Mar15Jun15Sep15Dec15Mar16
DSRI 1.16491.46551.43281.73251.20180.81740.81540.74450.7931.0788
GMI 0.94930.93730.92210.89830.9951.00671.02141.04360.99710.9993
AQI 0.92450.93830.94221.01141.09980.94250.98630.95550.91321.0185
SGI 0.79950.76970.71470.66390.85280.88250.93721.01550.91340.9329
DEPI 1.07471.13721.30771.39831.0980.90550.87930.78420.87351.0363
SGAI 0.59620.77231.08851.16631.12581.10521.0681.01731.32561.3338
LVGI 0.99510.99640.97790.9660.97250.98480.96481.03221.01461.0222
TATA 0.04290.04380.04160.03970.03310.04440.04450.0460.02520.0168
M-score -2.28-2.05-2.18-1.94-2.23-2.59-2.51-2.52-2.74-2.44
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