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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 -2.29.
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 * 1.0834||+||0.528 * -1.0949||+||0.404 * 0.1696||+||0.892 * 0.4355||+||0.115 * 0.8434|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.6837||+||4.679 * -0.4508||-||0.327 * 0.831|
|This Year (Mar16) TTM:||Last Year (Mar15) TTM:|
|Accounts Receivable was $48.5 Mil.|
Revenue was 35.453 + 52.22 + 61.397 + 74.451 = $223.5 Mil.
Gross Profit was -11.406 + -18.709 + -4.277 + -2.29 = $-36.7 Mil.
Total Current Assets was $218.4 Mil.
Total Assets was $360.5 Mil.
Property, Plant and Equipment(Net PPE) was $136.1 Mil.
Depreciation, Depletion and Amortization(DDA) was $36.0 Mil.
Selling, General & Admin. Expense(SGA) was $37.0 Mil.
Total Current Liabilities was $37.5 Mil.
Long-Term Debt was $0.0 Mil.
Net Income was -56.839 + -78.11 + -19.902 + -27.49 = $-182.3 Mil.
Non Operating Income was -1.178 + -8.452 + -2.069 + -1.258 = $-13.0 Mil.
Cash Flow from Operations was 2.116 + -6.481 + -1.818 + -0.689 = $-6.9 Mil.
|Accounts Receivable was $102.9 Mil.
Revenue was 91.67 + 134.541 + 141.946 + 145.106 = $513.3 Mil.
Gross Profit was 8.375 + 19.698 + 29.499 + 34.651 = $92.2 Mil.
Total Current Assets was $333.4 Mil.
Total Assets was $589.2 Mil.
Property, Plant and Equipment(Net PPE) was $198.0 Mil.
Depreciation, Depletion and Amortization(DDA) was $42.4 Mil.
Selling, General & Admin. Expense(SGA) was $50.5 Mil.
Total Current Liabilities was $73.7 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)|
|=||(48.532 / 223.521)||/||(102.861 / 513.263)|
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)|
|=||(92.223 / 513.263)||/||(-36.682 / 223.521)|
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 - (218.402 + 136.137) / 360.528)||/||(1 - (333.433 + 198.011) / 589.167)|
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))|
|=||(42.397 / (42.397 + 198.011))||/||(35.994 / (35.994 + 136.137))|
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)|
|=||(37.002 / 223.521)||/||(50.465 / 513.263)|
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 + 37.479) / 360.528)||/||((0 + 73.707) / 589.167)|
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|
|=||(-182.341 - -12.957||-||-6.872)||/||360.528|
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 -6.54 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