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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 -7.73. And the median was -2.25.
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 * 1.144||+||0.528 * 1.042||+||0.404 * 1.1416||+||0.892 * 1.0371||+||0.115 * 1.0862|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0969||+||4.679 * 0.0019||-||0.327 * 0.9865|
|This Year (Sep16) TTM:||Last Year (Sep15) TTM:|
|Accounts Receivable was $13,527 Mil.|
Revenue was 14913.5802469 + 16850.5617978 + 12208.2405345 + 16563.1808279 = $60,536 Mil.
Gross Profit was 10777.7777778 + 11762.9213483 + 8984.40979955 + 11842.0479303 = $43,367 Mil.
Total Current Assets was $21,861 Mil.
Total Assets was $135,429 Mil.
Property, Plant and Equipment(Net PPE) was $38,776 Mil.
Depreciation, Depletion and Amortization(DDA) was $10,682 Mil.
Selling, General & Admin. Expense(SGA) was $11,155 Mil.
Total Current Liabilities was $38,732 Mil.
Long-Term Debt was $51,292 Mil.
Net Income was 1103.25476992 + 522.471910112 + 864.142538976 + -2435.72984749 = $54 Mil.
Non Operating Income was 0 + 96.6292134831 + -4.45434298441 + -291.938997821 = $-200 Mil.
Cash Flow from Operations was 0 + 0 + 0 + 0 = $0 Mil.
|Accounts Receivable was $11,402 Mil.
Revenue was 15865.3198653 + 15735.1290685 + 12676.4069264 + 14092.4784217 = $58,369 Mil.
Gross Profit was 11205.3872054 + 11106.6217733 + 9366.88311688 + 11892.7250308 = $43,572 Mil.
Total Current Assets was $37,440 Mil.
Total Assets was $138,166 Mil.
Property, Plant and Equipment(Net PPE) was $33,886 Mil.
Depreciation, Depletion and Amortization(DDA) was $10,386 Mil.
Selling, General & Admin. Expense(SGA) was $9,805 Mil.
Total Current Liabilities was $40,684 Mil.
Long-Term Debt was $52,416 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)|
|=||(13527.4971942 / 60535.5634071)||/||(11401.7957351 / 58369.3342819)|
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)|
|=||(43571.6171264 / 58369.3342819)||/||(43367.1568559 / 60535.5634071)|
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 - (21860.8305275 + 38775.5331089) / 135428.731762)||/||(1 - (37439.9551066 + 33885.5218855) / 138166.105499)|
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))|
|=||(10385.7554169 / (10385.7554169 + 33885.5218855))||/||(10681.6904769 / (10681.6904769 + 38775.5331089))|
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)|
|=||(11154.5497745 / 60535.5634071)||/||(9805.25955146 / 58369.3342819)|
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)|
|=||((51291.8069585 + 38731.7620651) / 135428.731762)||/||((52416.3860831 + 40683.5016835) / 138166.105499)|
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|
|=||(54.1393715147 - -199.764127323||-||0)||/||135428.731762|
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 -2.23 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