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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.
Tesco Corp has a M-score of -2.81 suggests that the company is not a manipulator.
During the past 13 years, the highest Beneish M-Score of Tesco Corp was -0.88. The lowest was -3.46. And the median was -2.23.
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 * 1.136||+||0.528 * 0.9791||+||0.404 * 0.9397||+||0.892 * 0.9844||+||0.115 * 1.0108|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.1068||+||4.679 * -0.083||-||0.327 * 0.9953|
|This Year (Mar14) TTM:||Last Year (Mar13) TTM:|
|Accounts Receivable was $145.7 Mil.|
Revenue was 121.398 + 136.941 + 132.248 + 128.968 = $519.6 Mil.
Gross Profit was 25.505 + 27.441 + 29.687 + 30.097 = $112.7 Mil.
Total Current Assets was $387.4 Mil.
Total Assets was $641.5 Mil.
Property, Plant and Equipment(Net PPE) was $202.4 Mil.
Depreciation, Depletion and Amortization(DDA) was $40.5 Mil.
Selling, General & Admin. Expense(SGA) was $50.7 Mil.
Total Current Liabilities was $106.7 Mil.
Long-Term Debt was $0.0 Mil.
Net Income was 3.018 + 5.513 + 11.68 + 10.229 = $30.4 Mil.
Non Operating Income was -3.345 + -2.474 + -0.542 + 0.671 = $-5.7 Mil.
Cash Flow from Operations was 3.324 + 41.511 + 23.583 + 20.944 = $89.4 Mil.
|Accounts Receivable was $130.3 Mil.
Revenue was 127.095 + 137.626 + 126.419 + 136.673 = $527.8 Mil.
Gross Profit was 25.024 + 29.704 + 29.758 + 27.639 = $112.1 Mil.
Total Current Assets was $329.9 Mil.
Total Assets was $588.9 Mil.
Property, Plant and Equipment(Net PPE) was $208.6 Mil.
Depreciation, Depletion and Amortization(DDA) was $42.2 Mil.
Selling, General & Admin. Expense(SGA) was $46.5 Mil.
Total Current Liabilities was $98.3 Mil.
Long-Term Debt was $0.1 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)|
|=||(145.744 / 519.555)||/||(130.339 / 527.813)|
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)|
|=||(27.441 / 527.813)||/||(25.505 / 519.555)|
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 - (387.418 + 202.406) / 641.467)||/||(1 - (329.894 + 208.58) / 588.927)|
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))|
|=||(42.238 / (42.238 + 208.58))||/||(40.461 / (40.461 + 202.406))|
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)|
|=||(50.677 / 519.555)||/||(46.513 / 527.813)|
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)|
|=||((0.007 + 106.685) / 641.467)||/||((0.103 + 98.317) / 588.927)|
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|
|=||(30.44 - -5.69||-||89.362)||/||641.467|
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 -2.81 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