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Telefonica SA (NYSE:TEF)
Beneish M-Score
-2.80 (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 -2.93 suggests that the company is not a manipulator.

TEF' s 10-Year Beneish M-Score Range
Min: -7.37   Max: -1.77
Current: -2.8

-7.37
-1.77

During the past 13 years, the highest Beneish M-Score of Telefonica SA was -1.77. The lowest was -7.37. And the median was -2.80.


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 * 1.1713+0.528 * 1.0018+0.404 * 1.097+0.892 * 0.8751+0.115 * 1.0767
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0878+4.679 * -0.1151-0.327 * 0.9728
=-2.93

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

This Year (Dec14) TTM:Last Year (Dec13) TTM:
Accounts Receivable was $11,028 Mil.
Revenue was 16732.4290999 + 17030.9278351 + 18008.1521739 + 17142.461964 = $68,914 Mil.
Gross Profit was 11700.3699137 + 12087.628866 + 13001.3586957 + 12190.8713693 = $48,980 Mil.
Total Current Assets was $28,192 Mil.
Total Assets was $150,800 Mil.
Property, Plant and Equipment(Net PPE) was $41,113 Mil.
Depreciation, Depletion and Amortization(DDA) was $11,233 Mil.
Selling, General & Admin. Expense(SGA) was $10,808 Mil.
Total Current Liabilities was $36,620 Mil.
Long-Term Debt was $62,501 Mil.
Net Income was 187.422934649 + 1219.07216495 + 1645.38043478 + 957.123098202 = $4,009 Mil.
Non Operating Income was -917.38594328 + -11.5979381443 + -328.804347826 + 1.38312586445 = $-1,256 Mil.
Cash Flow from Operations was 15034.5252774 + 0 + 7584.23913043 + 0 = $22,619 Mil.
Accounts Receivable was $10,760 Mil.
Revenue was 21329.218107 + 19022.6969292 + 19846.9656992 + 18554.4041451 = $78,753 Mil.
Gross Profit was 15297.6680384 + 13411.2149533 + 14236.1477573 + 13129.5336788 = $56,075 Mil.
Total Current Assets was $40,144 Mil.
Total Assets was $163,048 Mil.
Property, Plant and Equipment(Net PPE) was $42,579 Mil.
Depreciation, Depletion and Amortization(DDA) was $12,793 Mil.
Selling, General & Admin. Expense(SGA) was $11,354 Mil.
Total Current Liabilities was $39,978 Mil.
Long-Term Debt was $70,195 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)
=(11028.3600493 / 68913.9710729) / (10759.9451303 / 78753.2848805)
=0.16003083 / 0.13662852
=1.1713

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)
=(12087.628866 / 78753.2848805) / (11700.3699137 / 68913.9710729)
=0.71202826 / 0.71074454
=1.0018

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 - (28192.3551171 + 41113.4401973) / 150800.246609) / (1 - (40144.0329218 + 42578.8751715) / 163048.010974)
=0.54041325 / 0.49264694
=1.097

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
=68913.9710729 / 78753.2848805
=0.8751

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))
=(12793.4119128 / (12793.4119128 + 42578.8751715)) / (11232.6100157 / (11232.6100157 + 41113.4401973))
=0.23104359 / 0.21458372
=1.0767

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)
=(10808.0441666 / 68913.9710729) / (11354.4285094 / 78753.2848805)
=0.15683386 / 0.14417721
=1.0878

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)
=((62500.6165228 + 36620.2219482) / 150800.246609) / ((70194.78738 + 39978.0521262) / 163048.010974)
=0.65729891 / 0.67570796
=0.9728

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
=(4008.99863258 - -1256.40510339 - 22618.7644079) / 150800.246609
=-0.1151

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 -2.93 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

Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14Dec14
DSRI 0.94761.02840.99221.17350.95070.99811.1991.10861.25941.1713
GMI 0.99070.99750.99510.99981.00811.0151.01451.01071.00251.0018
AQI 0.96580.94190.98950.96910.91660.92450.93830.94221.01141.097
SGI 0.95680.93340.9210.93880.94290.93320.94080.92380.91320.8751
DEPI 1.00181.01790.99740.97720.94050.98281.00371.09941.12011.0767
SGAI -0.04140.74990.42121.5273-9.06611.07531.87851.15881.20331.0878
LVGI 0.9980.99750.97780.98940.97880.99510.99640.97790.9660.9728
TATA -0.1332-0.1208-0.1085-0.1177-0.117-0.1141-0.1211-0.1266-0.1329-0.1151
M-score -3.03-3.06-2.97-3.03-1.42-3.11-3.08-3.07-2.94-2.93
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