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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 -1.14. The lowest was -3.71. And the median was -2.63.
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 * 1.2855||+||0.528 * 0.9451||+||0.404 * 1.0091||+||0.892 * 0.9798||+||0.115 * 1.0684|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.1587||+||4.679 * -0.0743||-||0.327 * 0.9378|
|This Year (Sep16) TTM:||Last Year (Sep15) TTM:|
|Accounts Receivable was $2,636 Mil.|
Revenue was 3287.02969384 + 3070.04732138 + 2820.82098432 + 2772.83858998 = $11,951 Mil.
Gross Profit was 1666.17330628 + 2034.030496 + 1372.29691725 + 1392.19387755 = $6,465 Mil.
Total Current Assets was $5,667 Mil.
Total Assets was $31,264 Mil.
Property, Plant and Equipment(Net PPE) was $9,444 Mil.
Depreciation, Depletion and Amortization(DDA) was $2,176 Mil.
Selling, General & Admin. Expense(SGA) was $3,937 Mil.
Total Current Liabilities was $6,276 Mil.
Long-Term Debt was $1,576 Mil.
Net Income was 292.847042912 + 204.32902962 + 329.429421309 + 279.46531643 = $1,106 Mil.
Non Operating Income was -79.4955735891 + -67.5059881989 + 14.5546241211 + 142.014533086 = $10 Mil.
Cash Flow from Operations was 947.466187139 + 871.847286324 + 555.93996755 + 1043.41630592 = $3,419 Mil.
|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 $3,468 Mil.
Total Current Liabilities was $5,263 Mil.
Long-Term Debt was $1,750 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)|
|=||(2636.37341694 / 11950.7365895)||/||(2092.97781308 / 12196.53627)|
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)|
|=||(6235.15856437 / 12196.53627)||/||(6464.69459708 / 11950.7365895)|
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 - (5666.59811878 + 9443.75937538) / 31264.0971966)||/||(1 - (4876.2630662 + 7902.28018036) / 26185.6494671)|
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))|
|=||(1976.6334801 / (1976.6334801 + 7902.28018036))||/||(2176.16846206 / (2176.16846206 + 9443.75937538))|
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)|
|=||(3937.01233379 / 11950.7365895)||/||(3467.80079938 / 12196.53627)|
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)|
|=||((1576.45364564 + 6275.99040944) / 31264.0971966)||/||((1749.76941996 + 5263.30164993) / 26185.6494671)|
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|
|=||(1106.07081027 - 9.56759541916||-||3418.66974693)||/||31264.0971966|
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 -2.61 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