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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.
Telefonica Brasil SA has a M-score of -2.59 suggests that the company is not a manipulator.
During the past 13 years, the highest Beneish M-Score of Telefonica Brasil SA was -1.22. The lowest was -3.74. And the median was -2.99.
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 Telefonica Brasil SA 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 * 1.5911||+||0.528 * 0.8612||+||0.404 * 0.9805||+||0.892 * 0.6988||+||0.115 * 1.4233|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.7507||+||4.679 * -0.0873||-||0.327 * 0.9617|
|This Year (Jun14) TTM:||Last Year (Jun13) TTM:|
|Accounts Receivable was $3,617 Mil.|
Revenue was 3872.25719424 + 0 + 3795.76697402 + 3938.84826325 = $11,607 Mil.
Gross Profit was 2169.91906475 + 0 + 2223.30259849 + 2171.29798903 = $6,565 Mil.
Total Current Assets was $6,979 Mil.
Total Assets was $31,241 Mil.
Property, Plant and Equipment(Net PPE) was $8,519 Mil.
Depreciation, Depletion and Amortization(DDA) was $2,356 Mil.
Selling, General & Admin. Expense(SGA) was $2,834 Mil.
Total Current Liabilities was $6,041 Mil.
Long-Term Debt was $2,799 Mil.
Net Income was 297.122302158 + 0 + 516.051969824 + 347.440585009 = $1,161 Mil.
Non Operating Income was -43.8399280576 + 0 + -28.5414920369 + -1.23400365631 = $-74 Mil.
Cash Flow from Operations was 1128.42041367 + 569.189431258 + 1070.78792959 + 1194.28702011 = $3,963 Mil.
|Accounts Receivable was $3,253 Mil.
Revenue was 3770.64831261 + 4275.6041979 + 4393.64990138 + 4169.11330049 = $16,609 Mil.
Gross Profit was 2111.72291297 + 2073.47426287 + 1511.7642998 + 2392.66009852 = $8,090 Mil.
Total Current Assets was $7,650 Mil.
Total Assets was $31,349 Mil.
Property, Plant and Equipment(Net PPE) was $7,587 Mil.
Depreciation, Depletion and Amortization(DDA) was $3,383 Mil.
Selling, General & Admin. Expense(SGA) was $5,401 Mil.
Total Current Liabilities was $6,123 Mil.
Long-Term Debt was $3,101 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)|
|=||(3616.55665468 / 11606.8724315)||/||(3252.57548845 / 16609.0157124)|
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)|
|=||(0 / 16609.0157124)||/||(2169.91906475 / 11606.8724315)|
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 - (6978.55710432 + 8518.64253597) / 31240.9802158)||/||(1 - (7649.68916519 + 7586.63410302) / 31348.6234458)|
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))|
|=||(3383.07844519 / (3383.07844519 + 7586.63410302))||/||(2356.31132973 / (2356.31132973 + 8518.64253597))|
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)|
|=||(2833.62339441 / 11606.8724315)||/||(5401.13224366 / 16609.0157124)|
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)|
|=||((2799.29766187 + 6040.92401079) / 31240.9802158)||/||((3101.42095915 + 6122.91296625) / 31348.6234458)|
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|
|=||(1160.61485699 - -73.6154237507||-||3962.68479463)||/||31240.9802158|
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.
Telefonica Brasil SA has a M-score of -2.59 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
Telefonica Brasil SA Annual Data
Telefonica Brasil SA Quarterly Data