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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 -2.73 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 -3.48. 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 * 1.0632||+||0.528 * 1.0086||+||0.404 * 1.005||+||0.892 * 1.03||+||0.115 * 1.0419|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0301||+||4.679 * -0.0726||-||0.327 * 0.9932|
|This Year (Jun14) TTM:||Last Year (Jun13) TTM:|
|Accounts Receivable was $142.0 Mil.|
Revenue was 145.106 + 121.398 + 136.941 + 132.248 = $535.7 Mil.
Gross Profit was 34.378 + 25.505 + 27.441 + 29.687 = $117.0 Mil.
Total Current Assets was $388.5 Mil.
Total Assets was $646.1 Mil.
Property, Plant and Equipment(Net PPE) was $205.1 Mil.
Depreciation, Depletion and Amortization(DDA) was $40.6 Mil.
Selling, General & Admin. Expense(SGA) was $50.3 Mil.
Total Current Liabilities was $96.6 Mil.
Long-Term Debt was $0.0 Mil.
Net Income was 12.74 + 3.018 + 5.513 + 11.68 = $33.0 Mil.
Non Operating Income was 0.975 + -3.345 + -2.474 + -0.542 = $-5.4 Mil.
Cash Flow from Operations was 16.822 + 3.324 + 41.511 + 23.583 = $85.2 Mil.
|Accounts Receivable was $129.7 Mil.
Revenue was 128.968 + 127.095 + 137.626 + 126.419 = $520.1 Mil.
Gross Profit was 30.097 + 25.024 + 29.704 + 29.758 = $114.6 Mil.
Total Current Assets was $336.3 Mil.
Total Assets was $588.8 Mil.
Property, Plant and Equipment(Net PPE) was $204.8 Mil.
Depreciation, Depletion and Amortization(DDA) was $42.6 Mil.
Selling, General & Admin. Expense(SGA) was $47.4 Mil.
Total Current Liabilities was $88.6 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)|
|=||(142.039 / 535.693)||/||(129.708 / 520.108)|
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)|
|=||(25.505 / 520.108)||/||(34.378 / 535.693)|
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 - (388.493 + 205.098) / 646.126)||/||(1 - (336.339 + 204.81) / 588.786)|
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))|
|=||(42.633 / (42.633 + 204.81))||/||(40.638 / (40.638 + 205.098))|
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)|
|=||(50.267 / 535.693)||/||(47.377 / 520.108)|
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 + 96.621) / 646.126)||/||((0.079 + 88.571) / 588.786)|
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|
|=||(32.951 - -5.386||-||85.24)||/||646.126|
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 -2.73 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