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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 -4.22. 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 * 1.5484||+||0.528 * 0.8956||+||0.404 * 0.9902||+||0.892 * 0.7015||+||0.115 * 1.8392|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9956||+||4.679 * -0.0694||-||0.327 * 0.9389|
|This Year (Sep14) TTM:||Last Year (Sep13) TTM:|
|Accounts Receivable was $2,729 Mil.|
Revenue was 3731.51760127 + 3853.57781753 + 0 + 3858.84107371 = $11,444 Mil.
Gross Profit was 1894.98738184 + 2187.70125224 + 0 + 2260.24712399 = $6,343 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 $2,347 Mil.
Selling, General & Admin. Expense(SGA) was $3,044 Mil.
Total Current Liabilities was $6,002 Mil.
Long-Term Debt was $2,674 Mil.
Net Income was 437.283459515 + 891.14490161 + 0 + 524.627183639 = $1,853 Mil.
Non Operating Income was 40.8704392831 + 49.8211091234 + 0 + -29.0157648061 = $62 Mil.
Cash Flow from Operations was 1131.40510715 + 1122.31663685 + 546.666666667 + 1088.58116745 = $3,889 Mil.
|Accounts Receivable was $2,513 Mil.
Revenue was 3806.6254417 + 3907.73124712 + 4312.24798387 + 4286.50433109 = $16,313 Mil.
Gross Profit was 2085.37985866 + 2190.47399908 + 2344.80846774 + 1477.43599615 = $8,098 Mil.
Total Current Assets was $8,185 Mil.
Total Assets was $31,588 Mil.
Property, Plant and Equipment(Net PPE) was $7,713 Mil.
Depreciation, Depletion and Amortization(DDA) was $5,236 Mil.
Selling, General & Admin. Expense(SGA) was $4,358 Mil.
Total Current Liabilities was $6,501 Mil.
Long-Term Debt was $3,158 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)|
|=||(2729.12528337 / 11443.9364925)||/||(2512.5 / 16313.1090038)|
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)|
|=||(2187.70125224 / 16313.1090038)||/||(1894.98738184 / 11443.9364925)|
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 - (7028.44090851 + 8327.77792036) / 30218.2142093)||/||(1 - (8185.42402827 + 7713.16254417) / 31588.2067138)|
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))|
|=||(5235.90474413 / (5235.90474413 + 7713.16254417))||/||(2346.7835086 / (2346.7835086 + 8327.77792036))|
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)|
|=||(3043.50472366 / 11443.9364925)||/||(4357.57077684 / 16313.1090038)|
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)|
|=||((2674.41849523 + 6001.53984345) / 30218.2142093)||/||((3158.48056537 + 6501.23674912) / 31588.2067138)|
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|
|=||(1853.05554476 - 61.6757836004||-||3888.96957811)||/||30218.2142093|
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 -2.51 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