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GuruFocus has detected 4 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 0.91011.38080.79410.98550.95220.9977
GMI 1.0411.07280.96480.8770.92591.0685
AQI 1.2141.19681.06392.41510.92850.9749
SGI 1.14470.93931.10791.88421.00560.9281
DEPI 0.590701.22820.68980.90640.9952
SGAI 1.26941.0281.10020.95081.19531.0626
LVGI 1.17220.86810.89340.75981.04241.0842
TATA 0.0886-0.1104-0.1137-0.0643-0.0849-0.0911
M-score -2.06-2.66-3.05-1.45-3.04-2.99

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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