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GuruFocus has detected 6 Warning Signs with Tesco Corp $TESO.
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Tesco Corp (NAS:TESO)
Beneish M-Score
-5.84 (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.

Tesco Corp has a M-score of -5.84 suggests that the company is not a manipulator.

TESO' s Beneish M-Score Range Over the Past 10 Years
Min: -6.79   Max: -0.76
Current: -5.84

-6.79
-0.76

During the past 13 years, the highest Beneish M-Score of Tesco Corp was -0.76. The lowest was -6.79. And the median was -2.32.


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 Tesco Corp 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 * 1.2241+0.528 * -0.1665+0.404 * 0.14+0.892 * 0.4189+0.115 * 0.9023
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.7268+4.679 * -0.4243-0.327 * 0.8995
=-5.84

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

This Year (Sep16) TTM:Last Year (Sep15) TTM:
Accounts Receivable was $38.9 Mil.
Revenue was 30.415 + 33.586 + 35.453 + 52.22 = $151.7 Mil.
Gross Profit was -13.913 + -10.078 + -11.406 + -18.709 = $-54.1 Mil.
Total Current Assets was $232.0 Mil.
Total Assets was $362.1 Mil.
Property, Plant and Equipment(Net PPE) was $125.6 Mil.
Depreciation, Depletion and Amortization(DDA) was $31.5 Mil.
Selling, General & Admin. Expense(SGA) was $32.7 Mil.
Total Current Liabilities was $31.3 Mil.
Long-Term Debt was $0.0 Mil.
Net Income was -22.069 + -18.871 + -56.839 + -78.11 = $-175.9 Mil.
Non Operating Income was -0.585 + -0.034 + -1.178 + -8.452 = $-10.2 Mil.
Cash Flow from Operations was -4.263 + -3.398 + 2.116 + -6.481 = $-12.0 Mil.
Accounts Receivable was $75.8 Mil.
Revenue was 61.397 + 74.451 + 91.67 + 134.541 = $362.1 Mil.
Gross Profit was -4.277 + -2.29 + 8.375 + 19.698 = $21.5 Mil.
Total Current Assets was $285.6 Mil.
Total Assets was $515.8 Mil.
Property, Plant and Equipment(Net PPE) was $184.0 Mil.
Depreciation, Depletion and Amortization(DDA) was $40.7 Mil.
Selling, General & Admin. Expense(SGA) was $45.2 Mil.
Total Current Liabilities was $49.6 Mil.
Long-Term Debt was $0.0 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)
=(38.882 / 151.674) / (75.821 / 362.059)
=0.25635244 / 0.20941614
=1.2241

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)
=(21.506 / 362.059) / (-54.106 / 151.674)
=0.05939916 / -0.35672561
=-0.1665

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 - (231.985 + 125.556) / 362.083) / (1 - (285.558 + 183.971) / 515.752)
=0.01254409 / 0.08962253
=0.14

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
=151.674 / 362.059
=0.4189

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))
=(40.657 / (40.657 + 183.971)) / (31.505 / (31.505 + 125.556))
=0.18099703 / 0.20059085
=0.9023

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)
=(32.694 / 151.674) / (45.196 / 362.059)
=0.21555441 / 0.12483048
=1.7268

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)
=((0 + 31.307) / 362.083) / ((0 + 49.577) / 515.752)
=0.0864636 / 0.09612566
=0.8995

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
=(-175.889 - -10.249 - -12.026) / 362.083
=-0.4243

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.

Tesco Corp has a M-score of -5.84 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.

Tesco Corp Annual Data

Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15
DSRI 0.75070.91260.96110.82771.27421.19081.03021.1380.88080.9696
GMI 0.75581.17960.89612.45070.54510.92990.93741.021.0546-3.3333
AQI 0.66831.02490.83011.15620.94040.93770.9160.93861.10510.1962
SGI 1.90221.19731.15690.66711.06111.35471.07830.94891.03450.5152
DEPI 0.92431.0591.01340.82161.01241.03690.93651.01340.97660.9725
SGAI 0.67451.01740.96391.33611.01530.770.84081.17051.03981.5278
LVGI 1.07921.03810.82530.54871.04831.46550.75090.98630.8480.6872
TATA 0.07980.0208-0.0544-0.1499-0.10310.01830.0569-0.0871-0.0194-0.2666
M-score -1.77-2.19-2.69-2.74-2.94-2.07-2.08-2.84-2.54-6.79

Tesco Corp Quarterly Data

Jun14Sep14Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16
DSRI 1.05010.9230.88080.76230.79720.89370.96961.08341.08661.2241
GMI 1.01311.02111.05461.20011.74263.5931-3.3333-1.0949-0.513-0.1665
AQI 1.0051.02131.10511.2171.06061.12930.19620.16960.15310.14
SGI 1.02921.03621.03450.98860.82680.66430.51520.43550.41270.4189
DEPI 1.03291.05320.97660.95330.92530.92680.97250.84340.8780.9023
SGAI 1.03661.08981.03981.00731.11891.32831.52781.68371.84141.7268
LVGI 0.99320.9020.8480.75220.69230.71210.68720.8310.73140.8995
TATA -0.0736-0.0676-0.0194-0.0391-0.0803-0.103-0.2666-0.4508-0.4013-0.4243
M-score -2.74-2.79-2.54-2.62-2.71-1.91-6.79-6.54-6.01-5.84
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