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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 13 years, the highest Beneish M-Score of Telefonica Brasil SA was -1.23. The lowest was -3.86. And the median was -2.32.
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 * 1.2707||+||0.528 * 1.001||+||0.404 * 1.0307||+||0.892 * 0.8296||+||0.115 * 1.5381|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0698||+||4.679 * -0.026||-||0.327 * 0.7887|
|This Year (Mar16) TTM:||Last Year (Mar15) TTM:|
|Accounts Receivable was $2,237 Mil.|
Revenue was 2820.82206598 + 2772.83858998 + 2710.79626973 + 3201.50560787 = $11,506 Mil.
Gross Profit was 1853.16387236 + 1392.19387755 + 1331.98350072 + 1572.66992319 = $6,150 Mil.
Total Current Assets was $4,865 Mil.
Total Assets was $27,378 Mil.
Property, Plant and Equipment(Net PPE) was $8,176 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,499 Mil.
Selling, General & Admin. Expense(SGA) was $3,531 Mil.
Total Current Liabilities was $4,650 Mil.
Long-Term Debt was $2,056 Mil.
Net Income was 1024.47268794 + 279.46531643 + 227.035509326 + 279.530803098 = $1,811 Mil.
Non Operating Income was 0 + 142.014533086 + -56.3586288174 + 0.141401806087 = $86 Mil.
Cash Flow from Operations was 0 + 1043.41630592 + 646.704242673 + 745.797795417 = $2,436 Mil.
|Accounts Receivable was $2,122 Mil.
Revenue was 2859.58489845 + 3424.65649722 + 3731.51760127 + 3853.57513417 = $13,869 Mil.
Gross Profit was 1597.94995862 + 1915.13683334 + 1894.98738184 + 2012.75715564 = $7,421 Mil.
Total Current Assets was $4,840 Mil.
Total Assets was $23,167 Mil.
Property, Plant and Equipment(Net PPE) was $6,557 Mil.
Depreciation, Depletion and Amortization(DDA) was $2,052 Mil.
Selling, General & Admin. Expense(SGA) was $3,978 Mil.
Total Current Liabilities was $5,442 Mil.
Long-Term Debt was $1,752 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)|
|=||(2237.47971877 / 11505.9625336)||/||(2122.46132298 / 13869.3341311)|
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)|
|=||(1392.19387755 / 13869.3341311)||/||(1853.16387236 / 11505.9625336)|
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 - (4865.33261222 + 8176.39264467) / 27378.3937263)||/||(1 - (4840.42146814 + 6556.75813332) / 23167.3776023)|
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))|
|=||(2051.53945676 / (2051.53945676 + 6556.75813332))||/||(1499.21282502 / (1499.21282502 + 8176.39264467))|
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)|
|=||(3530.50523555 / 11505.9625336)||/||(3977.92730087 / 13869.3341311)|
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)|
|=||((2055.7598702 + 4649.51325041) / 27378.3937263)||/||((1752.3078882 + 5441.61838671) / 23167.3776023)|
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|
|=||(1810.50431679 - 85.7973060747||-||2435.91834401)||/||27378.3937263|
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 -2.37 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