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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 Tellabs, Inc. was 0.00. The lowest was 0.00. And the median was 0.00.
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 Tellabs, Inc. 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 * 0.8577||+||0.528 * 1.0697||+||0.404 * 1.1982||+||0.892 * 0.7659||+||0.115 * 1.1867|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0398||+||4.679 * -0.0867||-||0.327 * 1.3075|
* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.
|This Year (Sep13) TTM:||Last Year (Sep12) TTM:|
|Accounts Receivable was $187.1 Mil.|
Revenue was 198.5 + 212.1 + 209.4 + 242.2 = $862.2 Mil.
Gross Profit was 73.8 + 80.2 + 72.3 + 93.4 = $319.7 Mil.
Total Current Assets was $1,121.9 Mil.
Total Assets was $1,518.6 Mil.
Property, Plant and Equipment(Net PPE) was $201.5 Mil.
Depreciation, Depletion and Amortization(DDA) was $41.0 Mil.
Selling, General & Admin. Expense(SGA) was $167.8 Mil.
Total Current Liabilities was $459.1 Mil.
Long-Term Debt was $0.0 Mil.
Net Income was -9.8 + -7.8 + -55.9 + -23.3 = $-96.8 Mil.
Non Operating Income was -1.3 + -1.2 + 1.2 + 3.1 = $1.8 Mil.
Cash Flow from Operations was 14.6 + -16.8 + -5.4 + 40.6 = $33.0 Mil.
|Accounts Receivable was $284.8 Mil.
Revenue was 264.4 + 288.1 + 257.9 + 315.3 = $1,125.7 Mil.
Gross Profit was 103.6 + 114.2 + 95.7 + 133 = $446.5 Mil.
Total Current Assets was $1,580.3 Mil.
Total Assets was $2,023.7 Mil.
Property, Plant and Equipment(Net PPE) was $226.3 Mil.
Depreciation, Depletion and Amortization(DDA) was $56.8 Mil.
Selling, General & Admin. Expense(SGA) was $210.7 Mil.
Total Current Liabilities was $467.9 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)|
|=||(187.1 / 862.2)||/||(284.8 / 1125.7)|
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)|
|=||(446.5 / 1125.7)||/||(319.7 / 862.2)|
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 - (1121.9 + 201.5) / 1518.6)||/||(1 - (1580.3 + 226.3) / 2023.7)|
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))|
|=||(56.8 / (56.8 + 226.3))||/||(41 / (41 + 201.5))|
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)|
|=||(167.8 / 862.2)||/||(210.7 / 1125.7)|
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 + 459.1) / 1518.6)||/||((0 + 467.9) / 2023.7)|
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|
|=||(-96.8 - 1.8||-||33)||/||1518.6|
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.
Tellabs, Inc. has a M-score of -3.19 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
Tellabs, Inc. Annual Data
Tellabs, Inc. Quarterly Data