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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 -14.96. And the median was -2.21.
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 * 0.8827||+||0.528 * 1.0049||+||0.404 * 0.9863||+||0.892 * 0.8657||+||0.115 * 0.938|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0915||+||4.679 * 0.0437||-||0.327 * 0.9648|
|This Year (Jun15) TTM:||Last Year (Jun14) TTM:|
|Accounts Receivable was $12,195 Mil.|
Revenue was 13540.9652076 + 12676.4069264 + 16732.4290999 + 17030.9278351 = $59,981 Mil.
Gross Profit was 9912.45791246 + 9366.88311688 + 11700.3699137 + 12087.628866 = $43,067 Mil.
Total Current Assets was $36,914 Mil.
Total Assets was $146,620 Mil.
Property, Plant and Equipment(Net PPE) was $36,444 Mil.
Depreciation, Depletion and Amortization(DDA) was $10,213 Mil.
Selling, General & Admin. Expense(SGA) was $9,972 Mil.
Total Current Liabilities was $40,759 Mil.
Long-Term Debt was $53,646 Mil.
Net Income was 2122.33445567 + 1950.21645022 + 187.422934649 + 1219.07216495 = $5,479 Mil.
Non Operating Income was -1.12233445567 + -3.24675324675 + -917.38594328 + -11.5979381443 = $-933 Mil.
Cash Flow from Operations was 0 + 0 + 0 + 0 = $0 Mil.
|Accounts Receivable was $15,959 Mil.
Revenue was 14559.7826087 + 14374.8271093 + 21329.218107 + 19022.6969292 = $69,287 Mil.
Gross Profit was 10691.576087 + 10594.7441217 + 15297.6680384 + 13411.2149533 = $49,995 Mil.
Total Current Assets was $36,516 Mil.
Total Assets was $159,564 Mil.
Property, Plant and Equipment(Net PPE) was $42,208 Mil.
Depreciation, Depletion and Amortization(DDA) was $10,905 Mil.
Selling, General & Admin. Expense(SGA) was $10,553 Mil.
Total Current Liabilities was $38,071 Mil.
Long-Term Debt was $68,423 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)|
|=||(12195.2861953 / 59980.729069)||/||(15959.2391304 / 69286.5247542)|
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)|
|=||(9366.88311688 / 69286.5247542)||/||(9912.45791246 / 59980.729069)|
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 - (36913.5802469 + 36444.4444444) / 146619.52862)||/||(1 - (36516.3043478 + 42207.8804348) / 159563.858696)|
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))|
|=||(10904.8658982 / (10904.8658982 + 42207.8804348))||/||(10212.9624494 / (10212.9624494 + 36444.4444444))|
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)|
|=||(9972.33297466 / 59980.729069)||/||(10553.3827897 / 69286.5247542)|
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)|
|=||((53646.4646465 + 40758.698092) / 146619.52862)||/||((68422.5543478 + 38070.6521739) / 159563.858696)|
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|
|=||(5479.04600548 - -933.352969127||-||0)||/||146619.52862|
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.
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