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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.
Telefonica SA has a M-score of signals that the company is a manipulator.
During the past 13 years, the highest Beneish M-Score of Telefonica SA was -3.02. The lowest was -7.43. And the median was -5.23.
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 *||+||0.528 *||+||0.404 *||+||0.892 *||+||0.115 *|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 *||+||4.679 *||-||0.327 *|
|This Year (Dec13) TTM:||Last Year (Dec12) TTM:|
|Accounts Receivable was $13,847 Mil.|
Revenue was 21183.9237057 + 19437.9263302 + 19691.0994764 + 18675.3585398 = $78,988 Mil.
Gross Profit was 15193.4604905 + 13703.9563438 + 14124.3455497 + 13215.1238592 = $56,237 Mil.
Total Current Assets was $39,871 Mil.
Total Assets was $161,937 Mil.
Property, Plant and Equipment(Net PPE) was $42,289 Mil.
Depreciation, Depletion and Amortization(DDA) was $0 Mil.
Selling, General & Admin. Expense(SGA) was $616 Mil.
Total Current Liabilities was $39,706 Mil.
Long-Term Debt was $69,717 Mil.
Net Income was 1972.7520436 + 1485.67530696 + 1510.47120419 + 1176.01043025 = $6,145 Mil.
Non Operating Income was -486.376021798 + -197.817189632 + -68.0628272251 + 23.4680573664 = $-729 Mil.
Cash Flow from Operations was 10824.2506812 + 0 + 8375.65445026 + 0 = $19,200 Mil.
|Accounts Receivable was $15,332 Mil.
Revenue was 23376.3297872 + 20394.2931258 + 19899.2628993 + 20655.2631579 = $84,325 Mil.
Gross Profit was 17164.893617 + 14761.3488975 + 14415.2334152 + 14607.8947368 = $60,949 Mil.
Total Current Assets was $34,037 Mil.
Total Assets was $172,570 Mil.
Property, Plant and Equipment(Net PPE) was $46,570 Mil.
Depreciation, Depletion and Amortization(DDA) was $0 Mil.
Selling, General & Admin. Expense(SGA) was $2,340 Mil.
Total Current Liabilities was $41,903 Mil.
Long-Term Debt was $75,277 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)|
|=||(13847.4114441 / 78988.3080521)||/||(15332.4468085 / 84325.1489702)|
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)|
|=||(13703.9563438 / 84325.1489702)||/||(15193.4604905 / 78988.3080521)|
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 - (39870.5722071 + 42288.8283379) / 161937.3297)||/||(1 - (34037.2340426 + 46570.4787234) / 172570.478723)|
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))|
|=||(0 / (0 + 46570.4787234))||/||(0 / (0 + 42288.8283379))|
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)|
|=||(615.811999133 / 78988.3080521)||/||(2340.31925591 / 84325.1489702)|
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)|
|=||((69716.6212534 + 39705.7220708) / 161937.3297)||/||((75276.5957447 + 41902.9255319) / 172570.478723)|
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|
|=||(6144.90898499 - -728.787981289||-||19199.9051315)||/||161937.3297|
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 signals that the company is likely to 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