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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 -0.95. The lowest was -3.74. And the median was -2.64.
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 * 0.9525||+||0.528 * 1.0306||+||0.404 * 1.041||+||0.892 * 0.8052||+||0.115 * 1.6536|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0436||+||4.679 * -0.0576||-||0.327 * 0.9328|
|This Year (Sep15) TTM:||Last Year (Sep14) TTM:|
|Accounts Receivable was $2,093 Mil.|
Revenue was 2710.79626973 + 3201.50560787 + 2859.57789521 + 3424.65649722 = $12,197 Mil.
Gross Profit was 1331.98350072 + 1572.66992319 + 1415.36830712 + 1915.13683334 = $6,235 Mil.
Total Current Assets was $4,876 Mil.
Total Assets was $26,186 Mil.
Property, Plant and Equipment(Net PPE) was $7,902 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,977 Mil.
Selling, General & Admin. Expense(SGA) was $3,686 Mil.
Total Current Liabilities was $5,263 Mil.
Long-Term Debt was $1,750 Mil.
Net Income was 227.035509326 + 279.530803098 + 184.541605654 + 477.270146485 = $1,168 Mil.
Non Operating Income was -56.3586288174 + 0.141401806087 + -62.8229451837 + -36.8295544873 = $-156 Mil.
Cash Flow from Operations was 646.704242673 + 745.815792011 + 319.266569046 + 1119.80014384 = $2,832 Mil.
|Accounts Receivable was $2,729 Mil.
Revenue was 3731.51760127 + 3853.57513417 + 3704.05591398 + 3858.84107371 = $15,148 Mil.
Gross Profit was 1894.98738184 + 2012.75715564 + 1813.15526882 + 2260.24712399 = $7,981 Mil.
Total Current Assets was $7,028 Mil.
Total Assets was $30,218 Mil.
Property, Plant and Equipment(Net PPE) was $8,328 Mil.
Depreciation, Depletion and Amortization(DDA) was $4,118 Mil.
Selling, General & Admin. Expense(SGA) was $4,387 Mil.
Total Current Liabilities was $6,002 Mil.
Long-Term Debt was $2,674 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)|
|=||(2092.97781308 / 12196.53627)||/||(2729.12528337 / 15147.9897231)|
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)|
|=||(1572.66992319 / 15147.9897231)||/||(1331.98350072 / 12196.53627)|
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 - (4876.2630662 + 7902.28018036) / 26185.6494671)||/||(1 - (7028.44090851 + 8327.77792036) / 30218.2142093)|
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))|
|=||(4117.61444724 / (4117.61444724 + 8327.77792036))||/||(1976.6334801 / (1976.6334801 + 7902.28018036))|
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)|
|=||(3685.96699383 / 12196.53627)||/||(4386.81180909 / 15147.9897231)|
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)|
|=||((1749.76941996 + 5263.30164993) / 26185.6494671)||/||((2674.41849523 + 6001.53984345) / 30218.2142093)|
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|
|=||(1168.37806456 - -155.869726682||-||2831.58674757)||/||26185.6494671|
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 -2.84 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