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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 Tesco Corp was -0.76. The lowest was -6.79. And the median was -2.32.
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|
|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
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)|
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)|
|=||(21.506 / 362.059)||/||(-54.106 / 151.674)|
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 - (231.985 + 125.556) / 362.083)||/||(1 - (285.558 + 183.971) / 515.752)|
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))|
|=||(40.657 / (40.657 + 183.971))||/||(31.505 / (31.505 + 125.556))|
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)|
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)|
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|
|=||(-175.889 - -10.249||-||-12.026)||/||362.083|
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.
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
Tesco Corp Annual Data
Tesco Corp Quarterly Data