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Tesco PLC (OTCPK:TSCDY)
Beneish M-Score
-3.60 (As of Today)

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 -3.65 suggests that the company is not a manipulator.

TSCDY' s Beneish M-Score Range Over the Past 10 Years
Min: -4.92   Max: -2.63
Current: -3.6

-4.92
-2.63

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.


Definition

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 * 1.0648+0.528 * -0.6467+0.404 * 0.9525+0.892 * 0.814+0.115 * 1.0175
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.7863+4.679 * -0.0453-0.327 * 1.0059
=-3.65

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.

This Year (Feb16) TTM:Last Year (Feb15) TTM:
Accounts Receivable was $709 Mil.
Revenue was $77,761 Mil.
Gross Profit was $4,077 Mil.
Total Current Assets was $21,183 Mil.
Total Assets was $62,720 Mil.
Property, Plant and Equipment(Net PPE) was $25,571 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,906 Mil.
Selling, General & Admin. Expense(SGA) was $2,646 Mil.
Total Current Liabilities was $28,163 Mil.
Long-Term Debt was $15,301 Mil.
Net Income was $197 Mil.
Non Operating Income was $0 Mil.
Cash Flow from Operations was $3,037 Mil.
Accounts Receivable was $817 Mil.
Revenue was $95,528 Mil.
Gross Profit was $-3,239 Mil.
Total Current Assets was $18,340 Mil.
Total Assets was $67,813 Mil.
Property, Plant and Equipment(Net PPE) was $31,350 Mil.
Depreciation, Depletion and Amortization(DDA) was $2,380 Mil.
Selling, General & Admin. Expense(SGA) was $4,133 Mil.
Total Current Liabilities was $30,383 Mil.
Long-Term Debt was $16,336 Mil.



1. DSRI = Days Sales in Receivables Index

Measured as the ratio of days’ sales in receivables in year t to year t-1.

A large increase in DSR could be indicative of revenue inflation.

DSRI=(Receivables_t / Revenue_t) / (Receivables_t-1 / Revenue_t-1)
=(708.571428571 / 77761.4285714) / (817.484662577 / 95527.607362)
=0.00911212 / 0.00855757
=1.0648

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.

GMI=GrossMargin_t-1 / GrossMargin_t
=(GrossProfit_t-1 / Revenue_t-1) / (GrossProfit_t / Revenue_t)
=( / 95527.607362) / ( / 77761.4285714)
=-0.03390919 / 0.05243143
=-0.6467

3. AQI = Asset Quality Index

AQI is the ratio of asset quality in year t to year t-1.

Asset quality is measured as the ratio of non-current assets other than plant, property and equipment to total assets.

AQI=(1 - (CurrentAssets_t + PPE_t) / TotalAssets_t) / (1 - (CurrentAssets_t-1 + PPE_t-1) / TotalAssets_t-1)
=(1 - (21182.8571429 + 25571.4285714) / 62720) / (1 - (18340.4907975 + 31349.6932515) / 67812.8834356)
=0.25455539 / 0.26724567
=0.9525

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.

SGI=Sales_t / Sales_t-1
=Revenue_t / Revenue_t-1
=77761.4285714 / 95527.607362
=0.814

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))
=(2380.36809816 / (2380.36809816 + 31349.6932515)) / (1905.71428571 / (1905.71428571 + 25571.4285714))
=0.07057112 / 0.06935635
=1.0175

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)
=(2645.71428571 / 77761.4285714) / (4133.43558282 / 95527.607362)
=0.03402348 / 0.04326954
=0.7863

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)
=((15301.4285714 + 28162.8571429) / 62720) / ((16335.8895706 + 30383.4355828) / 67812.8834356)
=0.69298925 / 0.68894468
=1.0059

8. TATA = Total Accruals to Total Assets

Total accruals calculated as the change in working capital accounts other than cash less depreciation.

TATA=(IncomefromContinuingOperations_t - CashFlowsfromOperations_t) / TotalAssets_t
=(NetIncome_t - NonOperatingIncome_t - CashFlowsfromOperations_t) / TotalAssets_t
=(197.142857143 - 0 - 3037.14285714) / 62720
=-0.0453

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 -3.65 suggests that the company will not be a manipulator.


Related Terms

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


Historical Data

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.

Tesco PLC Annual Data

Feb07Feb08Feb09Feb10Feb11Feb12Feb13Feb14Feb15Feb16
DSRI 111.0648
GMI 0.9997-1.8606-0.6467
AQI 0.831.32710.9525
SGI 1.04860.90780.814
DEPI 0.99920.85221.0175
SGAI 1.14041.65970.7863
LVGI 1.0561.12571.0059
TATA -0.0441-0.1408-0.0453
M-score -2.75-4.77-3.65
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