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GuruFocus has detected 6 Warning Signs with Telefonica Brasil SA $VIV.
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Telefonica Brasil SA (NYSE:VIV)
Beneish M-Score
-2.79 (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.

Telefonica Brasil SA has a M-score of -2.61 suggests that the company is not a manipulator.

VIV' s Beneish M-Score Range Over the Past 10 Years
Min: -3.71   Max: -1.23
Current: -2.79

-3.71
-1.23

During the past 13 years, the highest Beneish M-Score of Telefonica Brasil SA was -1.23. The lowest was -3.71. And the median was -2.64.


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 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 * 1.0794+0.528 * 0.8822+0.404 * 0.9546+0.892 * 1.1286+0.115 * 1.0542
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0401+4.679 * -0.0501-0.327 * 0.9967
=-2.61

* 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 $2,726 Mil.
Revenue was 3386.13908873 + 3241.99433512 + 3287.02969384 + 3070.04732138 = $12,985 Mil.
Gross Profit was 1768.73509193 + 1783.09719738 + 1666.17330628 + 2034.030496 = $7,252 Mil.
Total Current Assets was $6,400 Mil.
Total Assets was $33,047 Mil.
Property, Plant and Equipment(Net PPE) was $10,127 Mil.
Depreciation, Depletion and Amortization(DDA) was $2,340 Mil.
Selling, General & Admin. Expense(SGA) was $3,762 Mil.
Total Current Liabilities was $6,031 Mil.
Long-Term Debt was $2,036 Mil.
Net Income was 318.528217426 + 362.202146691 + 292.847042912 + 204.32902962 = $1,178 Mil.
Non Operating Income was -59.626538769 + -301.492546213 + -79.4955735891 + -67.5059881989 = $-508 Mil.
Cash Flow from Operations was 534.705355715 + 989.260584377 + 947.466187139 + 871.847286324 = $3,343 Mil.
Accounts Receivable was $2,237 Mil.
Revenue was 2820.82098432 + 2772.83858998 + 2710.79626973 + 3201.50560787 = $11,506 Mil.
Gross Profit was 1372.29691725 + 1392.19387755 + 1331.98350072 + 1572.66992319 = $5,669 Mil.
Total Current Assets was $4,865 Mil.
Total Assets was $27,378 Mil.
Property, Plant and Equipment(Net PPE) was $8,176 Mil.
Depreciation, Depletion and Amortization(DDA) was $2,017 Mil.
Selling, General & Admin. Expense(SGA) was $3,205 Mil.
Total Current Liabilities was $4,650 Mil.
Long-Term Debt was $2,056 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)
=(2725.51015188 / 12985.2104391) / (2237.47917793 / 11505.9614519)
=0.20989341 / 0.1944626
=1.0794

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)
=(5669.14421871 / 11505.9614519) / (7252.03609158 / 12985.2104391)
=0.49271365 / 0.55848429
=0.8822

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 - (6400.37633893 + 10127.3749001) / 33047.2338929) / (1 - (4865.32990806 + 8176.39453759) / 27378.3942672)
=0.4998749 / 0.52364904
=0.9546

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
=12985.2104391 / 11505.9614519
=1.1286

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))
=(2016.58843346 / (2016.58843346 + 8176.39453759)) / (2339.60685948 / (2339.60685948 + 10127.3749001))
=0.19784085 / 0.18766426
=1.0542

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)
=(3762.24998107 / 12985.2104391) / (3205.21777778 / 11505.9614519)
=0.28973346 / 0.27857018
=1.0401

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)
=((2036.06171063 + 6031.17953637) / 33047.2338929) / ((2055.77014602 + 4649.5016225) / 27378.3942672)
=0.24411245 / 0.24491107
=0.9967

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
=(1177.90643665 - -508.12064677 - 3343.27941355) / 33047.2338929
=-0.0501

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 -2.61 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.

Telefonica Brasil SA Annual Data

Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15Dec16
DSRI 0.8591.02610.95840.85231.09280.92851.0221.14951.07050.9954
GMI 1.02941.0031.06850.96510.91010.94481.03450.97411.02610.9703
AQI 1.2140.99881.19681.06392.41510.92850.97541.00351.03240.9672
SGI 1.21280.80871.35341.03211.69911.03130.90610.89550.78361.2209
DEPI 0.95860.94731.06691.30260.74870.88721.01481.13931.12540.9449
SGAI 1.14450.95121.07051.09431.08831.12671.07640.95970.97181.0038
LVGI 1.17221.03650.86810.89340.75981.04241.08290.97780.86240.9631
TATA -0.1479-0.1425-0.1178-0.1169-0.0609-0.0828-0.0835-0.0483-0.0485-0.0546
M-score -3.10-3.30-2.60-3.07-1.50-3.01-2.96-2.64-2.74-2.57

Telefonica Brasil SA Quarterly Data

Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16Dec16Mar17
DSRI 0.9191.07250.95251.27071.13331.28551.0794
GMI 0.97891.01181.03061.05920.95430.94510.8822
AQI 0.99021.02091.0411.03071.00851.00910.9546
SGI 0.90790.86830.80520.82960.86060.97981.1286
DEPI 1.01281.24021.08971.20460.93911.06841.0542
SGAI 1.07091.06450.97220.91080.9471.01191.0401
LVGI 1.08290.95670.93280.78870.94350.93780.9967
TATA -0.0811-0.0632-0.0585-0.0547-0.0564-0.0603-0.0501
M-score -3.07-2.78-2.90-2.49-2.75-2.52-2.61
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