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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 -1.13. The lowest was -3.71. And the median was -2.90.
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 * 0.919||+||0.528 * 1.0293||+||0.404 * 0.9902||+||0.892 * 0.9078||+||0.115 * 0.9803|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0693||+||4.679 * -0.0731||-||0.327 * 1.0829|
|This Year (Mar15) TTM:||Last Year (Mar14) TTM:|
|Accounts Receivable was $2,122 Mil.|
Revenue was 2859.58489845 + 3424.65649722 + 3731.51760127 + 3853.57781753 = $13,869 Mil.
Gross Profit was 1597.94995862 + 1915.13683334 + 1894.98738184 + 2187.70125224 = $7,596 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 $2,697 Mil.
Selling, General & Admin. Expense(SGA) was $3,659 Mil.
Total Current Liabilities was $5,442 Mil.
Long-Term Debt was $1,752 Mil.
Net Income was 184.535557395 + 477.270146485 + 437.283459515 + 891.14490161 = $1,990 Mil.
Non Operating Income was -62.8382249952 + -36.8295544873 + 40.8704392831 + 49.8211091234 = $-9 Mil.
Cash Flow from Operations was 319.284395492 + 1119.80014384 + 1131.40510715 + 1122.31663685 = $3,693 Mil.
|Accounts Receivable was $2,544 Mil.
Revenue was 3704.04301075 + 3858.84107371 + 3806.6254417 + 3907.73124712 = $15,277 Mil.
Gross Profit was 2075.65591398 + 2260.24712399 + 2085.37985866 + 2190.47399908 = $8,612 Mil.
Total Current Assets was $6,372 Mil.
Total Assets was $29,226 Mil.
Property, Plant and Equipment(Net PPE) was $7,860 Mil.
Depreciation, Depletion and Amortization(DDA) was $3,144 Mil.
Selling, General & Admin. Expense(SGA) was $3,770 Mil.
Total Current Liabilities was $5,619 Mil.
Long-Term Debt was $2,762 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)|
|=||(2122.46132298 / 13869.3368145)||/||(2543.91741935 / 15277.2407733)|
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)|
|=||(1915.13683334 / 15277.2407733)||/||(1597.94995862 / 13869.3368145)|
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 - (4840.42146814 + 6556.75813332) / 23167.3776023)||/||(1 - (6371.58666667 + 7859.93333333) / 29226.1763441)|
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))|
|=||(3143.79410358 / (3143.79410358 + 7859.93333333))||/||(2697.12746294 / (2697.12746294 + 6556.75813332))|
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)|
|=||(3659.23096813 / 13869.3368145)||/||(3769.5169361 / 15277.2407733)|
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)|
|=||((1752.3078882 + 5441.61838671) / 23167.3776023)||/||((2761.86795699 + 5618.5827957) / 29226.1763441)|
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|
|=||(1990.23406501 - -8.97623107597||-||3692.80628333)||/||23167.3776023|
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 -3.01 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