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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 -0.71. The lowest was -15.66. And the median was -2.69.
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 * 0.801||+||0.528 * 1.0104||+||0.404 * 0.9425||+||0.892 * 0.9007||+||0.115 * 0.8936|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0715||+||4.679 * -0.121||-||0.327 * 0.9848|
|This Year (Mar15) TTM:||Last Year (Mar14) TTM:|
|Accounts Receivable was $11,162 Mil.|
Revenue was 12676.4069264 + 16732.4290999 + 17030.9278351 + 20726.9021739 = $67,167 Mil.
Gross Profit was 9366.88311688 + 11700.3699137 + 12087.628866 + 14569.2934783 = $47,724 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 $11,058 Mil.
Selling, General & Admin. Expense(SGA) was $10,561 Mil.
Total Current Liabilities was $34,817 Mil.
Long-Term Debt was $52,763 Mil.
Net Income was 1950.21645022 + 187.422934649 + 1219.07216495 + 1650.81521739 = $5,008 Mil.
Non Operating Income was -3.24675324675 + -917.38594328 + -11.5979381443 + -332.880434783 = $-1,265 Mil.
Cash Flow from Operations was 0 + 15034.5252774 + 0 + 7584.23913043 = $22,619 Mil.
|Accounts Receivable was $15,473 Mil.
Revenue was 14374.8271093 + 21329.218107 + 19022.6969292 + 19846.9656992 = $74,574 Mil.
Gross Profit was 10594.7441217 + 15297.6680384 + 13411.2149533 + 14236.1477573 = $53,540 Mil.
Total Current Assets was $33,317 Mil.
Total Assets was $155,134 Mil.
Property, Plant and Equipment(Net PPE) was $41,675 Mil.
Depreciation, Depletion and Amortization(DDA) was $11,999 Mil.
Selling, General & Admin. Expense(SGA) was $10,943 Mil.
Total Current Liabilities was $36,552 Mil.
Long-Term Debt was $65,591 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)|
|=||(11162.3376623 / 67166.6660352)||/||(15473.0290456 / 74573.7078447)|
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)|
|=||(11700.3699137 / 74573.7078447)||/||(9366.88311688 / 67166.6660352)|
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 - (36158.008658 + 33143.9393939) / 135067.099567)||/||(1 - (33316.735823 + 41674.9654219) / 155134.163209)|
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))|
|=||(11999.2289245 / (11999.2289245 + 41674.9654219))||/||(11058.2724333 / (11058.2724333 + 33143.9393939))|
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)|
|=||(10561.4685941 / 67166.6660352)||/||(10943.2137236 / 74573.7078447)|
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)|
|=||((52762.987013 + 34817.0995671) / 135067.099567)||/||((65590.5947441 + 36551.8672199) / 155134.163209)|
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|
|=||(5007.5267672 - -1265.11106945||-||22618.7644079)||/||135067.099567|
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 -3.36 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