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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 -2.47.
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 * 1.1333||+||0.528 * 1.0413||+||0.404 * 1.0085||+||0.892 * 0.8606||+||0.115 * 0.9391|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9817||+||4.679 * -0.0708||-||0.327 * 0.9435|
|This Year (Jun16) TTM:||Last Year (Jun15) TTM:|
|Accounts Receivable was $2,508 Mil.|
Revenue was 3070.06163463 + 2820.82098432 + 2772.83858998 + 2710.79626973 = $11,375 Mil.
Gross Profit was 1521.81690717 + 1372.29691725 + 1392.19387755 + 1331.98350072 = $5,618 Mil.
Total Current Assets was $5,416 Mil.
Total Assets was $29,663 Mil.
Property, Plant and Equipment(Net PPE) was $8,855 Mil.
Depreciation, Depletion and Amortization(DDA) was $2,043 Mil.
Selling, General & Admin. Expense(SGA) was $3,379 Mil.
Total Current Liabilities was $5,536 Mil.
Long-Term Debt was $2,040 Mil.
Net Income was 204.327861191 + 329.429421309 + 279.46531643 + 227.035509326 = $1,040 Mil.
Non Operating Income was -78.6986621487 + 14.5546241211 + 142.014533086 + -56.3586288174 = $22 Mil.
Cash Flow from Operations was 871.847286324 + 555.93996755 + 1043.41630592 + 646.704242673 = $3,118 Mil.
|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 $3,999 Mil.
Total Current Liabilities was $6,633 Mil.
Long-Term Debt was $2,247 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)|
|=||(2508.13986096 / 11374.5174787)||/||(2571.57341646 / 13217.2576016)|
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)|
|=||(6798.1624455 / 13217.2576016)||/||(5618.29120269 / 11374.5174787)|
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 - (5416.08985219 + 8854.79143542) / 29662.7799848)||/||(1 - (6260.15072147 + 9664.74756564) / 32801.0916862)|
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))|
|=||(2064.53396522 / (2064.53396522 + 9664.74756564))||/||(2042.50215158 / (2042.50215158 + 8854.79143542))|
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)|
|=||(3378.9052912 / 11374.5174787)||/||(3999.46761441 / 13217.2576016)|
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)|
|=||((2039.97867617 + 5536.16229479) / 29662.7799848)||/||((2246.54497542 + 6633.16450815) / 32801.0916862)|
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|
|=||(1040.25810825 - 21.511866241||-||3117.90780246)||/||29662.7799848|
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 -2.77 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