Telefonica (Telefonica) Beneish M-Score

: -3.32 (As of Today)

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The zones of discrimination for M-Score is as such:

An M-Score of equal or less than -1.78 suggests that the company is unlikely to be a manipulator.
An M-Score of greater than -1.78 signals that the company is likely to be a manipulator.

Good Sign:

Beneish M-Score -3.32 no higher than -1.78, which implies that the company is unlikely to be a manipulator.

The historical rank and industry rank for Telefonica's Beneish M-Score or its related term are showing as below:

TEF' s Beneish M-Score Range Over the Past 10 Years
Min: -3.36 Med: -2.82 Max: -2.18
Current: -3.32

During the past 13 years, the highest Beneish M-Score of Telefonica was -2.18. The lowest was -3.36. And the median was -2.82.

Telefonica Beneish M-Score Historical Data

The historical data trend for Telefonica's Beneish M-Score can be seen below:

* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD.
* For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.

* Premium members only.

Telefonica Annual Data

Trend

Dec14

Dec15

Dec16

Dec17

Dec18

Dec19

Dec20

Dec21

Dec22

Dec23

Beneish M-Score

-3.10

-3.36

-2.55

-2.78

-3.32

Telefonica Quarterly Data
	Mar19	Jun19	Sep19	Dec19	Mar20	Jun20	Sep20	Dec20	Mar21	Jun21	Sep21	Dec21	Mar22	Jun22	Sep22	Dec22	Mar23	Jun23	Sep23	Dec23
Beneish M-Score																-2.78	-2.93	-3.09	-2.62	-3.32

Competitive Comparison

For the Telecom Services subindustry, Telefonica's Beneish M-Score, along with its competitors' market caps and Beneish M-Score data, can be viewed below:

* Competitive companies are chosen from companies within the same industry, with headquarter located in same country, with closest market capitalization; x-axis shows the market cap, and y-axis shows the term value; the bigger the dot, the larger the market cap. Note that "N/A" values will not show up in the chart.

Telefonica Beneish M-Score Distribution

For the Telecommunication Services industry and Communication Services sector, Telefonica's Beneish M-Score distribution charts can be found below:

* The bar in red indicates where Telefonica's Beneish M-Score falls into.

Telefonica Beneish M-Score Calculation

The M-score was created by Professor Messod Beneish. Instead of measuring the bankruptcy risk (Altman Z-Score) or business trend (Piotroski 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 for today is based on a combination of the following eight different indices:

-4.84

0.92 * DSRI

0.528 * GMI

0.404 * AQI

0.892 * SGI

0.115 * DEPI

-4.84

0.92 * 0.9097

0.528 * 0.8355

0.404 * 0.9959

0.892 * 1.0428

0.115 * 0.9877

0.172 * SGAI

4.679 * TATA

0.327 * LVGI

0.172 * 0

4.679 * -0.098487

0.327 * 2.183

-3.29

This Year (Dec23) TTM:

Last Year (Dec22) TTM:

Total Receivables was $9,796 Mil.
Revenue was 11071.974 + 11014.941 + 10978.332 + 10754.818 = $43,820 Mil.
Gross Profit was 11071.974 + 11014.941 + 10978.332 + 10754.818 = $43,820 Mil.
Total Current Assets was $22,635 Mil.
Total Assets was $113,767 Mil.
Property, Plant and Equipment(Net PPE) was $34,233 Mil.
Depreciation, Depletion and Amortization(DDA) was $9,482 Mil.
Selling, General, & Admin. Expense(SGA) was $0 Mil.
Total Current Liabilities was $25,517 Mil.
Long-Term Debt & Capital Lease Obligation was $41,888 Mil.
Net Income was -2348.964 + 535.752 + 500.542 + 319.058 = $-994 Mil.
Non Operating Income was -1858.233 + -239.061 + -52.004 + -207.709 = $-2,357 Mil.
Cash Flow from Operations was 3719.738 + 3147.279 + 3237.27 + 2463.597 = $12,568 Mil.

Total Receivables was $10,326 Mil.
Revenue was 10805.085 + 10240.594 + 10613.108 + 10363.436 = $42,022 Mil.
Gross Profit was 7184.322 + 6950.495 + 10613.108 + 10363.436 = $35,111 Mil.
Total Current Assets was $23,929 Mil.
Total Assets was $116,146 Mil.
Property, Plant and Equipment(Net PPE) was $33,891 Mil.
Depreciation, Depletion and Amortization(DDA) was $9,240 Mil.
Selling, General, & Admin. Expense(SGA) was $2,957 Mil.
Total Current Liabilities was $24,470 Mil.
Long-Term Debt & Capital Lease Obligation was $7,052 Mil.

1. DSRI = Days Sales in Receivables Index

Measured as the ratio of Revenue in Total 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)
	=	(9796.074 / 43820.065)	/	(10326.271 / 42022.223)
	=	0.223552	/	0.245734
	=	0.9097

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)
	=	(35111.361 / 42022.223)	/	(43820.065 / 43820.065)
	=	0.835543	/	1
	=	0.8355

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 Property, Plant and Equipment to Total Assets.

AQI	=	(1 - (CurrentAssets_t + PPE_t) / TotalAssets_t)	/	(1 - (CurrentAssets_t-1 + PPE_t-1) / TotalAssets_t-1)
	=	(1 - (22634.678 + 34233.37) / 113766.63)	/	(1 - (23929.025 + 33890.89) / 116146.186)
	=	0.500134	/	0.50218
	=	0.9959

4. SGI = Sales Growth Index

Ratio of Revenue 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
	=	43820.065	/	42022.223
	=	1.0428

5. DEPI = Depreciation Index

Measured as the ratio of the rate of Depreciation, Depletion and Amortization 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))
	=	(9239.82 / (9239.82 + 33890.89))	/	(9482.086 / (9482.086 + 34233.37))
	=	0.214228	/	0.216905
	=	0.9877

Note: If the Depreciation, Depletion and Amortization data is not available, we assume that the depreciation rate is constant and set the Depreciation Index to 1.

6. SGAI = Sales, General and Administrative expenses Index

The ratio of Selling, General, & Admin. Expense(SGA) to Sales 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)
	=	(0 / 43820.065)	/	(2957.059 / 42022.223)
	=	0	/	0.070369
	=	0

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 in leverage

LVGI	=	((LTD_t + CurrentLiabilities_t) / TotalAssets_t)	/	((LTD_t-1 + CurrentLiabilities_t-1) / TotalAssets_t-1)
	=	((41887.677 + 25516.903) / 113766.63)	/	((7051.907 + 24470.339) / 116146.186)
	=	0.592481	/	0.271401
	=	2.183

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
	=	(-993.612 - -2357.007	-	12567.884)	/	113766.63
	=	-0.098487

An M-Score of equal or less than -1.78 suggests that the company is unlikely to be a manipulator. An M-Score of greater than -1.78 signals that the company is likely to be a manipulator.

Telefonica has a M-score of -3.29 suggests that the company is unlikely to be a manipulator.

Telefonica Beneish M-Score Related Terms

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Telefonica (Telefonica) Business Description

Industry

GURUFOCUS.COM » STOCK LIST » Communication Services » Telecommunication Services » Telefonica SA (NYSE:TEF) » Definitions » Beneish M-Score

Comparable Companies

Traded in Other Exchanges

TEFOF:USA TEF:Peru TEF N:Mexico TEF:Italy 0A2Y:UK TEFe:UK 0TDE:UK TEF:Spain TNE5:Germany TNE5:Germany TNE2:Germany TNE5:Germany TNE5:Germany TNE2:Germany TLNC34:Brazil TEF:Austria

Address

Ronda de la Comunicacion, s/n, Central Building Auditorium, Floor 3, Telefonica District, Madrid, ESP, 28050

Website

https://www.telefonica.com

Telefonica operates mobile and fixed networks in Spain (where it is the incumbent telephone operator), the U.K., Germany, Brazil, and other Latin American countries like Colombia, Mexico, Argentina, and Chile, among others. The company derives more than 30% of its revenue from Spain, close to 20% from Germany and 20% from Brazil. Its U.K. operations are held through a joint venture with Virgin Media. For several years Telefonica has been simplifying its corporate structure by selling noncore assets.