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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 -0.96. The lowest was -3.92. And the median was -2.92.
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 * 1.0725||+||0.528 * 1.066||+||0.404 * 1.0209||+||0.892 * 0.8682||+||0.115 * 1.2402|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.1976||+||4.679 * -0.0573||-||0.327 * 0.9567|
|This Year (Jun15) TTM:||Last Year (Jun14) TTM:|
|Accounts Receivable was $2,572 Mil.|
Revenue was 3201.50560787 + 2859.57789521 + 3424.65649722 + 3731.51760127 = $13,217 Mil.
Gross Profit was 1572.66992319 + 1415.36830712 + 1915.13683334 + 1894.98738184 = $6,798 Mil.
Total Current Assets was $6,260 Mil.
Total Assets was $32,801 Mil.
Property, Plant and Equipment(Net PPE) was $9,665 Mil.
Depreciation, Depletion and Amortization(DDA) was $2,065 Mil.
Selling, General & Admin. Expense(SGA) was $3,951 Mil.
Total Current Liabilities was $6,633 Mil.
Long-Term Debt was $2,247 Mil.
Net Income was 279.530803098 + 184.541605654 + 477.270146485 + 437.283459515 = $1,379 Mil.
Non Operating Income was 0.141401806087 + -62.8229451837 + -36.8295544873 + 40.8704392831 = $-59 Mil.
Cash Flow from Operations was 745.815792011 + 319.266569046 + 1119.80014384 + 1131.40510715 = $3,316 Mil.
|Accounts Receivable was $2,762 Mil.
Revenue was 3853.57781753 + 3704.05591398 + 3858.84107371 + 3806.6254417 = $15,223 Mil.
Gross Profit was 2187.70125224 + 1813.15526882 + 2260.24712399 + 2085.37985866 = $8,346 Mil.
Total Current Assets was $6,941 Mil.
Total Assets was $31,073 Mil.
Property, Plant and Equipment(Net PPE) was $8,473 Mil.
Depreciation, Depletion and Amortization(DDA) was $2,366 Mil.
Selling, General & Admin. Expense(SGA) was $3,800 Mil.
Total Current Liabilities was $6,009 Mil.
Long-Term Debt was $2,784 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)|
|=||(2571.57341646 / 13217.2576016)||/||(2761.62254025 / 15223.1002469)|
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)|
|=||(1415.36830712 / 15223.1002469)||/||(1572.66992319 / 13217.2576016)|
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 - (6260.15072147 + 9664.74756564) / 32801.0916862)||/||(1 - (6941.10509839 + 8472.92531306) / 31073.3184258)|
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))|
|=||(2366.11423391 / (2366.11423391 + 8472.92531306))||/||(2064.53396522 / (2064.53396522 + 9664.74756564))|
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)|
|=||(3951.45800145 / 13217.2576016)||/||(3800.27996567 / 15223.1002469)|
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)|
|=||((2246.54497542 + 6633.16450815) / 32801.0916862)||/||((2784.2745975 + 6008.50402504) / 31073.3184258)|
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|
|=||(1378.62601475 - -58.6406585818||-||3316.28761204)||/||32801.0916862|
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 -2.75 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