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Telefonica SA (NYSE:TEF)
Beneish M-Score
-2.45 (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 -2.52 suggests that the company is not a manipulator.

TEF' s Beneish M-Score Range Over the Past 10 Years
Min: -14.96   Max: -0.71
Current: -2.45

-14.96
-0.71

During the past 13 years, the highest Beneish M-Score of Telefonica SA was -0.71. The lowest was -14.96. And the median was -2.23.


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 * 0.7537+0.528 * 1.0321+0.404 * 0.9555+0.892 * 1.0031+0.115 * 0.7991
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0082+4.679 * 0.0461-0.327 * 1.0322
=-2.52

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

This Year (Sep15) TTM:Last Year (Sep14) TTM:
Accounts Receivable was $11,402 Mil.
Revenue was 13590.3479237 + 13540.9652076 + 12676.4069264 + 24728.729963 = $64,536 Mil.
Gross Profit was 9945.00561167 + 9912.45791246 + 9366.88311688 + 16421.701603 = $45,646 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 $11,101 Mil.
Selling, General & Admin. Expense(SGA) was $10,298 Mil.
Total Current Liabilities was $40,684 Mil.
Long-Term Debt was $52,416 Mil.
Net Income was 992.14365881 + 2122.33445567 + 1950.21645022 + 373.612823674 = $5,438 Mil.
Non Operating Income was -1.12233445567 + -1.12233445567 + -3.24675324675 + -928.483353884 = $-934 Mil.
Cash Flow from Operations was 0 + 0 + 0 + 0 = $0 Mil.
Accounts Receivable was $15,081 Mil.
Revenue was 14072.1649485 + 14559.7826087 + 14374.8271093 + 21329.218107 = $64,336 Mil.
Gross Profit was 10380.1546392 + 10691.576087 + 10594.7441217 + 15297.6680384 = $46,964 Mil.
Total Current Assets was $35,500 Mil.
Total Assets was $155,238 Mil.
Property, Plant and Equipment(Net PPE) was $41,138 Mil.
Depreciation, Depletion and Amortization(DDA) was $10,104 Mil.
Selling, General & Admin. Expense(SGA) was $10,183 Mil.
Total Current Liabilities was $36,081 Mil.
Long-Term Debt was $65,258 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)
=(11401.7957351 / 64536.4500207) / (15081.185567 / 64335.9927734)
=0.17667219 / 0.23441288
=0.7537

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)
=(9912.45791246 / 64335.9927734) / (9945.00561167 / 64536.4500207)
=0.72998241 / 0.70729097
=1.0321

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 - (37439.9551066 + 33885.5218855) / 138166.105499) / (1 - (35500 + 41137.8865979) / 155238.402062)
=0.48377008 / 0.50632134
=0.9555

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
=64536.4500207 / 64335.9927734
=1.0031

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))
=(10104.305357 / (10104.305357 + 41137.8865979)) / (11100.8900486 / (11100.8900486 + 33885.5218855))
=0.19718722 / 0.24676096
=0.7991

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)
=(10298.3186532 / 64536.4500207) / (10182.5584604 / 64335.9927734)
=0.15957368 / 0.15827157
=1.0082

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)
=((52416.3860831 + 40683.5016835) / 138166.105499) / ((65257.7319588 + 36081.185567) / 155238.402062)
=0.67382581 / 0.65279542
=1.0322

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
=(5438.30738837 - -933.974776042 - 0) / 138166.105499
=0.0461

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 -2.52 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

Jun13Sep13Dec13Mar14Jun14Sep14Dec14Mar15Jun15Sep15
DSRI 1.17350.95070.99811.24351.2081.4391.19170.81470.81430.7537
GMI 0.99981.00811.0151.00740.99990.98231.00291.01181.01811.0321
AQI 0.96910.91660.92450.93830.94221.01141.0970.94250.98630.9555
SGI 0.93880.94290.93320.90710.84770.79930.86010.88550.93841.0031
DEPI 0.97720.94050.98281.03251.17191.23981.08520.90.88420.7991
SGAI 1.5273-9.06611.07531.90961.21031.29131.1011.08451.04761.0082
LVGI 0.98940.97880.99510.99640.97790.9660.97280.98480.96481.0322
TATA -0.0094-0.01-0.0097-0.01150.04170.03980.03320.04450.04470.0461
M-score -2.52-0.92-2.62-2.57-2.26-2.09-2.23-2.58-2.50-2.52
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