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GuruFocus has detected 6 Warning Signs with First Solar Inc $FSLR.
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First Solar Inc (NAS:FSLR)
Beneish M-Score
-3.30 (As of Today)

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.

First Solar Inc has a M-score of -3.30 suggests that the company is not a manipulator.

FSLR' s Beneish M-Score Range Over the Past 10 Years
Min: -3.85   Max: 3.01
Current: -3.3

-3.85
3.01

During the past 13 years, the highest Beneish M-Score of First Solar Inc was 3.01. The lowest was -3.85. And the median was -2.03.


Definition

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 First Solar Inc 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 * 0.8445+0.528 * 1.6564+0.404 * 1.0137+0.892 * 0.7513+0.115 * 0.676
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.229+4.679 * -0.1749-0.327 * 0.7167
=-3.30

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

This Year (Mar17) TTM:Last Year (Mar16) TTM:
Accounts Receivable was $222 Mil.
Revenue was 891.791 + 480.434 + 688.029 + 934.381 = $2,995 Mil.
Gross Profit was 84.184 + 63.589 + 186.28 + 191.165 = $525 Mil.
Total Current Assets was $3,330 Mil.
Total Assets was $6,605 Mil.
Property, Plant and Equipment(Net PPE) was $692 Mil.
Depreciation, Depletion and Amortization(DDA) was $206 Mil.
Selling, General & Admin. Expense(SGA) was $245 Mil.
Total Current Liabilities was $527 Mil.
Long-Term Debt was $266 Mil.
Net Income was 9.129 + -696.083 + 154.146 + 13.408 = $-519 Mil.
Non Operating Income was 26.107 + -14.221 + 4.123 + 4.03 = $20 Mil.
Cash Flow from Operations was 493.144 + 307.326 + -75.792 + -108.999 = $616 Mil.
Accounts Receivable was $349 Mil.
Revenue was 876.068 + 942.324 + 1271.245 + 896.217 = $3,986 Mil.
Gross Profit was 277.611 + 231.438 + 484.365 + 164.483 = $1,158 Mil.
Total Current Assets was $3,274 Mil.
Total Assets was $7,578 Mil.
Property, Plant and Equipment(Net PPE) was $1,381 Mil.
Depreciation, Depletion and Amortization(DDA) was $253 Mil.
Selling, General & Admin. Expense(SGA) was $265 Mil.
Total Current Liabilities was $1,064 Mil.
Long-Term Debt was $205 Mil.



1. DSRI = Days Sales in Receivables Index

Measured as the ratio of days’ sales in receivables in year t to year t-1.

A large increase in DSR could be indicative of revenue inflation.

DSRI=(Receivables_t / Revenue_t) / (Receivables_t-1 / Revenue_t-1)
=(221.722 / 2994.635) / (349.467 / 3985.854)
=0.07403974 / 0.08767682
=0.8445

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.

GMI=GrossMargin_t-1 / GrossMargin_t
=(GrossProfit_t-1 / Revenue_t-1) / (GrossProfit_t / Revenue_t)
=(1157.897 / 3985.854) / (525.218 / 2994.635)
=0.29050161 / 0.17538632
=1.6564

3. AQI = Asset Quality Index

AQI is the ratio of asset quality in year t to year t-1.

Asset quality is measured as the ratio of non-current assets other than plant, property and equipment to total assets.

AQI=(1 - (CurrentAssets_t + PPE_t) / TotalAssets_t) / (1 - (CurrentAssets_t-1 + PPE_t-1) / TotalAssets_t-1)
=(1 - (3330.238 + 691.767) / 6604.503) / (1 - (3274.157 + 1380.635) / 7577.789)
=0.39102079 / 0.38573217
=1.0137

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.

SGI=Sales_t / Sales_t-1
=Revenue_t / Revenue_t-1
=2994.635 / 3985.854
=0.7513

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))
=(252.94 / (252.94 + 1380.635)) / (205.533 / (205.533 + 691.767))
=0.15483831 / 0.22905717
=0.676

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)
=(244.861 / 2994.635) / (265.175 / 3985.854)
=0.08176656 / 0.06652903
=1.229

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)
=((265.823 + 527.051) / 6604.503) / ((205.262 + 1064.129) / 7577.789)
=0.12005052 / 0.16751469
=0.7167

8. TATA = Total Accruals to Total Assets

Total accruals calculated as the change in working capital accounts other than cash less depreciation.

TATA=(IncomefromContinuingOperations_t - CashFlowsfromOperations_t) / TotalAssets_t
=(NetIncome_t - NonOperatingIncome_t - CashFlowsfromOperations_t) / TotalAssets_t
=(-519.4 - 20.039 - 615.679) / 6604.503
=-0.1749

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.

First Solar Inc has a M-score of -3.30 suggests that the company will not be a manipulator.


Related Terms

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


Historical Data

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

First Solar Inc Annual Data

Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15Dec16
DSRI 0.1741.37362.21791.09070.93742.5240.70130.2013.50250.646
GMI 0.80560.91641.07671.09381.31571.38770.9691.07390.94711.0768
AQI 5.26190.90933.27671.03410.74891.34370.79011.30721.09410.823
SGI 3.73392.47291.65791.24071.07911.21770.98251.02461.05540.8246
DEPI 1.00270.81630.56921.17830.85770.78051.01521.00810.91080.8932
SGAI 0.58890.84260.83760.95871.2120.53150.96240.92570.99521.1726
LVGI 0.95221.3850.62670.96121.77470.9151.00830.68010.95780.9318
TATA -0.0352-0.0565-0.0111-0.0092-0.0013-0.135-0.0728-0.04960.1208-0.0861
M-score 0.74-1.290.24-2.12-2.71-1.09-3.21-3.140.45-3.42

First Solar Inc Quarterly Data

Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16Dec16Mar17
DSRI 0.20091.72891.57790.60033.50420.76030.86230.60030.640.8445
GMI 1.07151.23021.16660.82360.94930.74420.72991.06091.06471.6564
AQI 1.30721.02371.05441.24021.09411.21971.11861.2280.8231.0137
SGI 1.02510.83090.92481.15561.05491.36881.2330.94410.83230.7513
DEPI 1.00810.99220.99430.95480.91080.96471.20230.97180.89320.676
SGAI 0.92531.2921.29210.97910.99570.70530.6920.95451.16171.229
LVGI 0.68010.99660.84670.96330.95780.94330.85721.19790.93180.7167
TATA -0.0492-0.0596-0.0260.00240.12080.07890.08060.0621-0.0824-0.1749
M-score -3.14-2.16-2.03-2.680.45-1.98-1.99-2.54-3.40-3.30
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