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Telefonica SA (NYSE:TEF)
Beneish M-Score
-2.60 (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 -2.83 suggests that the company is not a manipulator.

TEF' s 10-Year Beneish M-Score Range
Min: -14.96   Max: -0.71
Current: -2.6

-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 -2.40.


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 * 0.801+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 * -0.0097-0.327 * 0.9848
=-2.83

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

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 + 0 + 0 + 7584.23913043 = $7,584 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

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)
=(11162.3376623 / 67166.6660352) / (15473.0290456 / 74573.7078447)
=0.16618865 / 0.20748638
=0.801

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)
=(11700.3699137 / 74573.7078447) / (9366.88311688 / 67166.6660352)
=0.71794439 / 0.71053364
=1.0104

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 - (36158.008658 + 33143.9393939) / 135067.099567) / (1 - (33316.735823 + 41674.9654219) / 155134.163209)
=0.48690726 / 0.51660099
=0.9425

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
=67166.6660352 / 74573.7078447
=0.9007

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))
=0.22355676 / 0.25017464
=0.8936

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)
=0.15724271 / 0.14674359
=1.0715

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)
=0.6484191 / 0.65841372
=0.9848

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
=(5007.5267672 - -1265.11106945 - 7584.23913043) / 135067.099567
=-0.0097

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 -2.83 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

Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14Dec14Mar15
DSRI 1.02840.99221.17350.95070.99811.24351.10931.26031.17210.801
GMI 0.99750.99510.99981.00811.0151.00741.01051.00241.00171.0104
AQI 0.94190.98950.96910.91660.92450.93830.94221.01141.0970.9425
SGI 0.93340.9210.93880.94290.93320.90710.92320.91260.87440.9007
DEPI 1.01790.99740.97720.94050.98281.03251.11.12071.07730.8936
SGAI 0.74990.42121.5273-9.06611.07531.90961.15921.20361.08821.0715
LVGI 0.99750.97780.98940.97880.99510.99640.97790.9660.97280.9848
TATA -0.1208-0.1085-0.1343-0.1334-0.0097-0.0115-0.0033-0.0061-0.0154-0.0097
M-score -3.06-2.97-3.11-1.50-2.62-2.57-2.49-2.35-2.46-2.83
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