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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 -1.75.
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 * 0.6053||+||0.528 * 1.1109||+||0.404 * 1.1539||+||0.892 * 1.2632||+||0.115 * 1.2573|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.2333||+||4.679 * 0.0049||-||0.327 * 0.907|
|This Year (Sep15) TTM:||Last Year (Sep14) TTM:|
|Accounts Receivable was $120 Mil.|
Revenue was 936.789 + 954.976 + 939.88 + 0 = $2,832 Mil.
Gross Profit was 231.496 + 213.37 + 260.073 + 0 = $705 Mil.
Total Current Assets was $2,999 Mil.
Total Assets was $7,547 Mil.
Property, Plant and Equipment(Net PPE) was $4,465 Mil.
Depreciation, Depletion and Amortization(DDA) was $347 Mil.
Selling, General & Admin. Expense(SGA) was $634 Mil.
Total Current Liabilities was $2,554 Mil.
Long-Term Debt was $2,028 Mil.
Net Income was -229.858 + -184.227 + -154.181 + 0 = $-568 Mil.
Non Operating Income was -15.431 + 13.233 + -22.305 + 0 = $-25 Mil.
Cash Flow from Operations was -203.34 + -159.516 + -131.794 + -86.402 = $-581 Mil.
|Accounts Receivable was $157 Mil.
Revenue was 851.804 + 769.349 + 620.542 + 0 = $2,242 Mil.
Gross Profit was 251.851 + 212.995 + 155.128 + 0 = $620 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 $407 Mil.
Total Current Liabilities was $1,840 Mil.
Long-Term Debt was $1,799 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)|
|=||(119.964 / 2831.645)||/||(156.889 / 2241.695)|
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)|
|=||(213.37 / 2241.695)||/||(231.496 / 2831.645)|
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 - (2998.795 + 4464.536) / 7547.497)||/||(1 - (3362.914 + 2022.069) / 5437.533)|
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))|
|=||(201.54 / (201.54 + 2022.069))||/||(346.843 / (346.843 + 4464.536))|
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)|
|=||(633.578 / 2831.645)||/||(406.689 / 2241.695)|
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)|
|=||((2027.575 + 2553.771) / 7547.497)||/||((1799.441 + 1839.777) / 5437.533)|
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|
|=||(-568.266 - -24.503||-||-581.052)||/||7547.497|
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 -2.44 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
Tesla Motors Inc Annual Data
Tesla Motors Inc Quarterly Data