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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 -0.81. The lowest was -3.46. And the median was -2.28.
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 * 0.8937||+||0.528 * 3.5931||+||0.404 * 1.1293||+||0.892 * 0.6643||+||0.115 * 0.9268|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.3283||+||4.679 * -0.103||-||0.327 * 0.7121|
|This Year (Sep15) TTM:||Last Year (Sep14) TTM:|
|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.
Net Income was -19.902 + -27.49 + -8.252 + -2.078 = $-57.7 Mil.
Non Operating Income was -2.069 + -1.258 + -2.95 + -1.719 = $-8.0 Mil.
Cash Flow from Operations was -1.818 + -0.689 + 2.374 + 3.526 = $3.4 Mil.
|Accounts Receivable was $127.7 Mil.
Revenue was 141.946 + 145.106 + 121.398 + 136.553 = $545.0 Mil.
Gross Profit was 29.499 + 34.651 + 25.505 + 26.665 = $116.3 Mil.
Total Current Assets was $374.2 Mil.
Total Assets was $627.7 Mil.
Property, Plant and Equipment(Net PPE) was $203.8 Mil.
Depreciation, Depletion and Amortization(DDA) was $41.1 Mil.
Selling, General & Admin. Expense(SGA) was $51.2 Mil.
Total Current Liabilities was $84.7 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)|
|=||(75.821 / 362.059)||/||(127.714 / 545.003)|
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)|
|=||(-2.29 / 545.003)||/||(-4.277 / 362.059)|
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 - (285.558 + 183.971) / 515.752)||/||(1 - (374.158 + 203.751) / 627.724)|
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))|
|=||(41.07 / (41.07 + 203.751))||/||(40.657 / (40.657 + 183.971))|
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)|
|=||(45.196 / 362.059)||/||(51.219 / 545.003)|
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 + 49.577) / 515.752)||/||((0.015 + 84.721) / 627.724)|
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|
|=||(-57.722 - -7.996||-||3.393)||/||515.752|
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 -1.91 signals that the company is likely to 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