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Telefonica SA (NYSE:TEF)
Beneish M-Score
-2.24 (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 -3.20 suggests that the company is not a manipulator.

TEF' s Beneish M-Score Range Over the Past 10 Years
Min: -15.04   Max: -0.68
Current: -2.24

-15.04
-0.68

During the past 13 years, the highest Beneish M-Score of Telefonica SA was -0.68. The lowest was -15.04. And the median was -2.30.


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 * 0.6259+0.528 * 1.078+0.404 * 0.9132+0.892 * 1.1572+0.115 * 0.7595
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0298+4.679 * -0.1034-0.327 * 1.0146
=-3.20

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

This Year (Dec15) TTM:Last Year (Dec14) TTM:
Accounts Receivable was $7,988 Mil.
Revenue was $62,012 Mil.
Gross Profit was $43,987 Mil.
Total Current Assets was $34,397 Mil.
Total Assets was $133,959 Mil.
Property, Plant and Equipment(Net PPE) was $33,278 Mil.
Depreciation, Depletion and Amortization(DDA) was $10,571 Mil.
Selling, General & Admin. Expense(SGA) was $11,273 Mil.
Total Current Liabilities was $37,984 Mil.
Long-Term Debt was $51,326 Mil.
Net Income was $671 Mil.
Non Operating Income was $-303 Mil.
Cash Flow from Operations was $14,831 Mil.
Accounts Receivable was $11,028 Mil.
Revenue was $53,586 Mil.
Gross Profit was $40,973 Mil.
Total Current Assets was $28,237 Mil.
Total Assets was $150,861 Mil.
Property, Plant and Equipment(Net PPE) was $40,883 Mil.
Depreciation, Depletion and Amortization(DDA) was $9,163 Mil.
Selling, General & Admin. Expense(SGA) was $9,460 Mil.
Total Current Liabilities was $36,633 Mil.
Long-Term Debt was $62,501 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)
=(7988.01742919 / 62011.9825708) / (11028.3600493 / 53585.6966708)
=0.1288141 / 0.20580791
=0.6259

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)
=(40972.8729963 / 53585.6966708) / (43986.9281046 / 62011.9825708)
=0.76462331 / 0.70932949
=1.078

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 - (34396.5141612 + 33277.7777778) / 133958.605664) / (1 - (28236.7447596 + 40882.8606658) / 150860.665845)
=0.49481191 / 0.5418315
=0.9132

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
=62011.9825708 / 53585.6966708
=1.1572

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))
=(9162.76202219 / (9162.76202219 + 40882.8606658)) / (10570.8061002 / (10570.8061002 + 33277.7777778))
=0.18308818 / 0.2410752
=0.7595

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)
=(11273.4204793 / 62011.9825708) / (9459.92601726 / 53585.6966708)
=0.18179423 / 0.17653827
=1.0298

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)
=((51325.708061 + 37983.6601307) / 133958.605664) / ((62500.6165228 + 36632.5524044) / 150860.665845)
=0.66669377 / 0.6571174
=1.0146

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
=(671.023965142 - -302.832244009 - 14831.1546841) / 133958.605664
=-0.1034

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 -3.20 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 local exchange's currency.

Telefonica SA Annual Data

Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15
DSRI 0.88260.8970.97851.16831.07280.72150.96631.14021.32620.6259
GMI 1.05440.98541.00420.98380.971.02330.99770.95150.99041.078
AQI 1.22110.98550.99120.94051.16161.00680.94190.92451.09980.9132
SGI 1.62391.2280.91471.05281.03530.96990.99330.81690.77281.1572
DEPI 0.86680.98840.98571.04481.06010.92730.96921.05641.18670.7595
SGAI 0.84150.95220.95580.54550.8221.35140.9150.98531.14771.0298
LVGI 1.09880.96131.03480.98060.94851.04120.99750.99510.97251.0146
TATA -0.0855-0.0642-0.0865-0.0729-0.0498-0.0871-0.0725-0.0782-0.0686-0.1034
M-score -2.33-2.67-2.99-2.56-2.51-3.24-2.87-2.93-2.66-3.20
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