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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 8 years, the highest Beneish M-Score of Tesla Motors Inc was 5.66. The lowest was -4.22. And the median was -1.66.
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 * 1.6282||+||0.528 * 0.8862||+||0.404 * 1.0604||+||0.892 * 1.6975||+||0.115 * 1.1872|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.1274||+||4.679 * -0.0202||-||0.327 * 1.035|
|This Year (Mar15) TTM:||Last Year (Mar14) TTM:|
|Accounts Receivable was $200 Mil.|
Revenue was 939.88 + 956.661 + 851.804 + 769.349 = $3,518 Mil.
Gross Profit was 260.073 + 261.697 + 251.851 + 212.995 = $987 Mil.
Total Current Assets was $2,921 Mil.
Total Assets was $6,120 Mil.
Property, Plant and Equipment(Net PPE) was $3,136 Mil.
Depreciation, Depletion and Amortization(DDA) was $265 Mil.
Selling, General & Admin. Expense(SGA) was $681 Mil.
Total Current Liabilities was $2,192 Mil.
Long-Term Debt was $1,954 Mil.
Net Income was -154.181 + -107.629 + -74.708 + -61.9 = $-398 Mil.
Non Operating Income was -22.305 + -0.588 + -3.09 + -1.226 = $-27 Mil.
Cash Flow from Operations was -131.794 + -86.402 + -27.996 + -1.662 = $-248 Mil.
|Accounts Receivable was $72 Mil.
Revenue was 620.542 + 615.219 + 431.346 + 405.139 = $2,072 Mil.
Gross Profit was 155.128 + 156.589 + 102.868 + 100.483 = $515 Mil.
Total Current Assets was $3,156 Mil.
Total Assets was $4,500 Mil.
Property, Plant and Equipment(Net PPE) was $1,301 Mil.
Depreciation, Depletion and Amortization(DDA) was $133 Mil.
Selling, General & Admin. Expense(SGA) was $356 Mil.
Total Current Liabilities was $1,413 Mil.
Long-Term Debt was $1,533 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)|
|=||(200.052 / 3517.694)||/||(72.38 / 2072.246)|
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)|
|=||(261.697 / 2072.246)||/||(260.073 / 3517.694)|
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 - (2921.417 + 3136.252) / 6120.03)||/||(1 - (3156.047 + 1301.118) / 4500.41)|
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))|
|=||(132.501 / (132.501 + 1301.118))||/||(264.775 / (264.775 + 3136.252))|
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)|
|=||(681.473 / 3517.694)||/||(356.074 / 2072.246)|
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)|
|=||((1954.214 + 2192.381) / 6120.03)||/||((1532.539 + 1413.47) / 4500.41)|
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|
|=||(-398.418 - -27.209||-||-247.854)||/||6120.03|
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 -1.42 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