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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 -2.85 suggests that the company is not a manipulator.
During the past 13 years, the highest Beneish M-Score of Telefonica Brasil SA was -1.01. The lowest was -3.74. And the median was -2.95.
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 * 1.0328||+||0.528 * 0.9116||+||0.404 * 0.9744||+||0.892 * 0.9093||+||0.115 * 1.0686|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9589||+||4.679 * -0.0676||-||0.327 * 0.8876|
|This Year (Mar14) TTM:||Last Year (Mar13) TTM:|
|Accounts Receivable was $3,543 Mil.|
Revenue was 3856.66368115 + 3795.76697402 + 3938.84826325 + 3770.64831261 = $15,362 Mil.
Gross Profit was 1887.85759069 + 2223.30259849 + 2171.29798903 + 2113.63232682 = $8,396 Mil.
Total Current Assets was $6,634 Mil.
Total Assets was $30,430 Mil.
Property, Plant and Equipment(Net PPE) was $8,184 Mil.
Depreciation, Depletion and Amortization(DDA) was $2,426 Mil.
Selling, General & Admin. Expense(SGA) was $3,963 Mil.
Total Current Liabilities was $5,850 Mil.
Long-Term Debt was $2,876 Mil.
Net Income was 295.911330049 + 516.051969824 + 347.440585009 + 405.95026643 = $1,565 Mil.
Non Operating Income was -54.2727272727 + -28.5414920369 + -1.23400365631 + -0.754884547069 = $-85 Mil.
Cash Flow from Operations was 569.218092253 + 1070.78792959 + 1194.28702011 + 874.156305506 = $3,708 Mil.
|Accounts Receivable was $3,773 Mil.
Revenue was 4275.6041979 + 4392.18737673 + 4167.78325123 + 4059.31034483 = $16,895 Mil.
Gross Profit was 2073.47426287 + 1513.86193294 + 2391.23152709 + 2438.91625616 = $8,417 Mil.
Total Current Assets was $7,717 Mil.
Total Assets was $34,300 Mil.
Property, Plant and Equipment(Net PPE) was $8,524 Mil.
Depreciation, Depletion and Amortization(DDA) was $2,756 Mil.
Selling, General & Admin. Expense(SGA) was $4,546 Mil.
Total Current Liabilities was $6,419 Mil.
Long-Term Debt was $4,662 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)|
|=||(3542.87729512 / 15361.927231)||/||(3772.68865567 / 16894.8851707)|
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)|
|=||(2223.30259849 / 16894.8851707)||/||(1887.85759069 / 15361.927231)|
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 - (6634.09717868 + 8183.76399463) / 30430.3000448)||/||(1 - (7716.89805097 + 8523.87956022) / 34300.1609195)|
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))|
|=||(2756.39092658 / (2756.39092658 + 8523.87956022))||/||(2426.02555923 / (2426.02555923 + 8183.76399463))|
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)|
|=||(3963.44241877 / 15361.927231)||/||(4545.71578782 / 16894.8851707)|
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)|
|=||((2875.65741155 + 5850.06941335) / 30430.3000448)||/||((4662.23288356 + 6418.77361319) / 34300.1609195)|
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|
|=||(1565.35415131 - -84.803107513||-||3708.44934746)||/||30430.3000448|
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 -2.85 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