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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 PLC has a M-score of -2.80 suggests that the company is not a manipulator.
During the past 13 years, the highest Beneish M-Score of Tesco PLC was -2.63. The lowest was -4.92. And the median was -4.60.
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 PLC 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 * 0.8653||+||0.528 * 1.0384||+||0.404 * 0.83||+||0.892 * 1.104||+||0.115 * 0.9992|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.1154||+||4.679 * -0.0432||-||0.327 * 1.056|
|This Year (Feb14) TTM:||Last Year (Feb13) TTM:|
|Accounts Receivable was $3,638 Mil.|
Revenue was $105,576 Mil.
Gross Profit was $6,661 Mil.
Total Current Assets was $25,867 Mil.
Total Assets was $83,329 Mil.
Property, Plant and Equipment(Net PPE) was $40,681 Mil.
Depreciation, Depletion and Amortization(DDA) was $2,603 Mil.
Selling, General & Admin. Expense(SGA) was $2,752 Mil.
Total Current Liabilities was $35,547 Mil.
Long-Term Debt was $15,453 Mil.
Net Income was $1,618 Mil.
Non Operating Income was $-76 Mil.
Cash Flow from Operations was $5,291 Mil.
|Accounts Receivable was $3,808 Mil.
Revenue was $95,635 Mil.
Gross Profit was $6,265 Mil.
Total Current Assets was $19,753 Mil.
Total Assets was $75,609 Mil.
Property, Plant and Equipment(Net PPE) was $37,511 Mil.
Depreciation, Depletion and Amortization(DDA) was $2,398 Mil.
Selling, General & Admin. Expense(SGA) was $2,235 Mil.
Total Current Liabilities was $28,635 Mil.
Long-Term Debt was $15,186 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)|
|=||(3637.87375415 / 105576.41196)||/||(3808.44645551 / 95634.9924585)|
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)|
|=||( / 95634.9924585)||/||( / 105576.41196)|
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 - (25867.1096346 + 40681.0631229) / 83328.9036545)||/||(1 - (19752.6395173 + 37511.3122172) / 75609.3514329)|
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))|
|=||(2398.19004525 / (2398.19004525 + 37511.3122172))||/||(2602.99003322 / (2602.99003322 + 40681.0631229))|
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)|
|=||(2752.49169435 / 105576.41196)||/||(2235.29411765 / 95634.9924585)|
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)|
|=||((15453.4883721 + 35546.5116279) / 83328.9036545)||/||((15185.520362 + 28634.9924585) / 75609.3514329)|
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|
|=||(1617.94019934 - -76.4119601329||-||5290.69767442)||/||83328.9036545|
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 PLC has a M-score of -2.80 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 PLC Annual Data