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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 Tenet Healthcare Corp was -1.91. The lowest was -3.64. And the median was -2.72.
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 Tenet Healthcare 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 *||+||0.528 *||+||0.404 *||+||0.892 *||+||0.115 *|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 *||+||4.679 *||-||0.327 *|
|This Year (Dec15) TTM:||Last Year (Dec14) TTM:|
|Accounts Receivable was $2,704 Mil.|
Revenue was 5026 + 4692 + 4492 + 4428 = $18,638 Mil.
Gross Profit was 1766 + 1682 + 1600 + 1616 = $6,664 Mil.
Total Current Assets was $5,171 Mil.
Total Assets was $23,682 Mil.
Property, Plant and Equipment(Net PPE) was $7,915 Mil.
Depreciation, Depletion and Amortization(DDA) was $797 Mil.
Selling, General & Admin. Expense(SGA) was $0 Mil.
Total Current Liabilities was $4,308 Mil.
Long-Term Debt was $14,383 Mil.
Net Income was -97 + -29 + -61 + 47 = $-140 Mil.
Non Operating Income was 0 + 1 + -1 + 0 = $0 Mil.
Cash Flow from Operations was 191 + 482 + 410 + -57 = $1,026 Mil.
|Accounts Receivable was $2,404 Mil.
Revenue was 4465 + 4175 + 4038 + 3926 = $16,604 Mil.
Gross Profit was 1659 + 1482 + 1433 + 1377 = $5,951 Mil.
Total Current Assets was $3,970 Mil.
Total Assets was $17,951 Mil.
Property, Plant and Equipment(Net PPE) was $7,733 Mil.
Depreciation, Depletion and Amortization(DDA) was $849 Mil.
Selling, General & Admin. Expense(SGA) was $0 Mil.
Total Current Liabilities was $3,577 Mil.
Long-Term Debt was $11,505 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)|
|=||(2704 / 18638)||/||(2404 / 16604)|
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)|
|=||(1682 / 16604)||/||(1766 / 18638)|
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 - (5171 + 7915) / 23682)||/||(1 - (3970 + 7733) / 17951)|
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))|
|=||(849 / (849 + 7733))||/||(797 / (797 + 7915))|
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)|
|=||(0 / 18638)||/||(0 / 16604)|
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)|
|=||((14383 + 4308) / 23682)||/||((11505 + 3577) / 17951)|
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|
|=||(-140 - 0||-||1026)||/||23682|
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.
Tenet Healthcare Corp has a M-score of 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
Tenet Healthcare Corp Annual Data
Tenet Healthcare Corp Quarterly Data