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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 -2.31.
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 * 1.0866||+||0.528 * -0.513||+||0.404 * 0.1531||+||0.892 * 0.4127||+||0.115 * 0.878|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.8414||+||4.679 * -0.4013||-||0.327 * 0.7314|
* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.
|This Year (Jun16) TTM:||Last Year (Jun15) TTM:|
|Accounts Receivable was $39.3 Mil.|
Revenue was 33.586 + 35.453 + 52.22 + 61.397 = $182.7 Mil.
Gross Profit was -10.078 + -11.406 + -18.709 + -4.277 = $-44.5 Mil.
Total Current Assets was $244.9 Mil.
Total Assets was $379.8 Mil.
Property, Plant and Equipment(Net PPE) was $129.9 Mil.
Depreciation, Depletion and Amortization(DDA) was $33.6 Mil.
Selling, General & Admin. Expense(SGA) was $35.3 Mil.
Total Current Liabilities was $28.8 Mil.
Long-Term Debt was $0.0 Mil.
Net Income was -18.871 + -56.839 + -78.11 + -19.902 = $-173.7 Mil.
Non Operating Income was -0.034 + -1.178 + -8.452 + -2.069 = $-11.7 Mil.
Cash Flow from Operations was -3.398 + 2.116 + -6.481 + -1.818 = $-9.6 Mil.
|Accounts Receivable was $87.6 Mil.
Revenue was 74.451 + 91.67 + 134.541 + 141.946 = $442.6 Mil.
Gross Profit was -2.29 + 8.375 + 19.698 + 29.499 = $55.3 Mil.
Total Current Assets was $304.2 Mil.
Total Assets was $540.1 Mil.
Property, Plant and Equipment(Net PPE) was $189.3 Mil.
Depreciation, Depletion and Amortization(DDA) was $41.7 Mil.
Selling, General & Admin. Expense(SGA) was $46.5 Mil.
Total Current Liabilities was $55.9 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)|
|=||(39.282 / 182.656)||/||(87.602 / 442.608)|
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)|
|=||(55.282 / 442.608)||/||(-44.47 / 182.656)|
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 - (244.881 + 129.899) / 379.795)||/||(1 - (304.214 + 189.307) / 540.094)|
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))|
|=||(41.652 / (41.652 + 189.307))||/||(33.577 / (33.577 + 129.899))|
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)|
|=||(35.335 / 182.656)||/||(46.498 / 442.608)|
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 + 28.757) / 379.795)||/||((0 + 55.914) / 540.094)|
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|
|=||(-173.722 - -11.733||-||-9.581)||/||379.795|
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 -6.01 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