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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.
Tesla Motors Inc has a M-score of -1.68 signals that the company is a manipulator.
During the past 8 years, the highest Beneish M-Score of Tesla Motors Inc was 5.66. The lowest was -4.22. And the median was -2.43.
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 Tesla Motors 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 * 1.9674||+||0.528 * 0.6982||+||0.404 * 0.8673||+||0.892 * 1.676||+||0.115 * 0.8928|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.3184||+||4.679 * -0.0673||-||0.327 * 1.3141|
|This Year (Sep14) TTM:||Last Year (Sep13) TTM:|
|Accounts Receivable was $157 Mil.|
Revenue was 851.804 + 769.349 + 620.542 + 615.219 = $2,857 Mil.
Gross Profit was 251.851 + 212.995 + 155.128 + 156.589 = $777 Mil.
Total Current Assets was $3,363 Mil.
Total Assets was $5,438 Mil.
Property, Plant and Equipment(Net PPE) was $2,022 Mil.
Depreciation, Depletion and Amortization(DDA) was $202 Mil.
Selling, General & Admin. Expense(SGA) was $508 Mil.
Total Current Liabilities was $1,487 Mil.
Long-Term Debt was $2,407 Mil.
Net Income was -74.708 + -61.902 + -49.8 + -16.264 = $-203 Mil.
Non Operating Income was -3.09 + -1.228 + 6.718 + 4.584 = $7 Mil.
Cash Flow from Operations was -27.996 + -3.579 + 60.64 + 127.177 = $156 Mil.
|Accounts Receivable was $48 Mil.
Revenue was 431.346 + 405.139 + 561.792 + 306.332 = $1,705 Mil.
Gross Profit was 102.868 + 100.483 + 96.32 + 23.857 = $324 Mil.
Total Current Assets was $1,219 Mil.
Total Assets was $2,166 Mil.
Property, Plant and Equipment(Net PPE) was $923 Mil.
Depreciation, Depletion and Amortization(DDA) was $81 Mil.
Selling, General & Admin. Expense(SGA) was $230 Mil.
Total Current Liabilities was $1,169 Mil.
Long-Term Debt was $11 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)|
|=||(156.889 / 2856.914)||/||(47.58 / 1704.609)|
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)|
|=||(212.995 / 1704.609)||/||(251.851 / 2856.914)|
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 - (3362.914 + 2022.069) / 5437.533)||/||(1 - (1218.766 + 923.306) / 2166.209)|
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))|
|=||(81.29 / (81.29 + 923.306))||/||(201.54 / (201.54 + 2022.069))|
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)|
|=||(508.178 / 2856.914)||/||(229.987 / 1704.609)|
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)|
|=||((2406.659 + 1486.88) / 5437.533)||/||((10.931 + 1169.459) / 2166.209)|
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|
|=||(-202.674 - 6.984||-||156.242)||/||5437.533|
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.
Tesla Motors Inc has a M-score of -1.68 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
Tesla Motors Inc Annual Data
Tesla Motors Inc Quarterly Data