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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 9 years, the highest Beneish M-Score of Tesla Motors Inc was 5.65. The lowest was -4.24. And the median was -2.03.
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 * 1.3149||+||0.528 * 1.3024||+||0.404 * 1.2271||+||0.892 * 1.2091||+||0.115 * 0.9832|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.2684||+||4.679 * -0.0396||-||0.327 * 0.9108|
|This Year (Mar16) TTM:||Last Year (Mar15) TTM:|
|Accounts Receivable was $318 Mil.|
Revenue was 1147.048 + 1214.38 + 936.789 + 954.976 = $4,253 Mil.
Gross Profit was 252.468 + 218.564 + 231.496 + 213.37 = $916 Mil.
Total Current Assets was $3,240 Mil.
Total Assets was $9,192 Mil.
Property, Plant and Equipment(Net PPE) was $5,837 Mil.
Depreciation, Depletion and Amortization(DDA) was $502 Mil.
Selling, General & Admin. Expense(SGA) was $1,045 Mil.
Total Current Liabilities was $3,188 Mil.
Long-Term Debt was $2,484 Mil.
Net Income was -282.267 + -320.397 + -229.858 + -184.227 = $-1,017 Mil.
Non Operating Income was 9.177 + -17.149 + -15.431 + 13.233 = $-10 Mil.
Cash Flow from Operations was -249.605 + -29.849 + -203.34 + -159.516 = $-642 Mil.
|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.
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)|
|=||(318.056 / 4253.193)||/||(200.052 / 3517.694)|
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)|
|=||(986.616 / 3517.694)||/||(915.898 / 4253.193)|
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 - (3239.543 + 5837.224) / 9191.702)||/||(1 - (2921.417 + 3136.252) / 6120.03)|
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))|
|=||(264.775 / (264.775 + 3136.252))||/||(501.938 / (501.938 + 5837.224))|
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)|
|=||(1045.077 / 4253.193)||/||(681.473 / 3517.694)|
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)|
|=||((2484.329 + 3187.699) / 9191.702)||/||((1954.214 + 2192.381) / 6120.03)|
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|
|=||(-1016.749 - -10.17||-||-642.31)||/||9191.702|
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 -1.96 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