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GuruFocus has detected 5 Warning Signs with BlackRock Inc $BLK.
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BlackRock Inc (NYSE:BLK)
Beneish M-Score
-2.41 (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.

BlackRock Inc has a M-score of -2.41 suggests that the company is not a manipulator.

BLK' s Beneish M-Score Range Over the Past 10 Years
Min: -12.72   Max: -0.97
Current: -2.41

-12.72
-0.97

During the past 13 years, the highest Beneish M-Score of BlackRock Inc was -0.97. The lowest was -12.72. And the median was -2.44.


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 BlackRock 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 * 1.0737+0.528 * 1.0027+0.404 * 0.9989+0.892 * 0.9784+0.115 * 1.0265
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.988+4.679 * 0.0044-0.327 * 1.0128
=-2.41

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

This Year (Dec16) TTM:Last Year (Dec15) TTM:
Accounts Receivable was $2,350 Mil.
Revenue was 2890 + 2837 + 2804 + 2624 = $11,155 Mil.
Gross Profit was 2781 + 2723 + 2695 + 2527 = $10,726 Mil.
Total Current Assets was $8,525 Mil.
Total Assets was $220,177 Mil.
Property, Plant and Equipment(Net PPE) was $559 Mil.
Depreciation, Depletion and Amortization(DDA) was $229 Mil.
Selling, General & Admin. Expense(SGA) was $5,947 Mil.
Total Current Liabilities was $2,974 Mil.
Long-Term Debt was $4,915 Mil.
Net Income was 851 + 875 + 789 + 657 = $3,172 Mil.
Non Operating Income was 6 + 31 + 20 + -2 = $55 Mil.
Cash Flow from Operations was 1192 + 1060 + 467 + -565 = $2,154 Mil.
Accounts Receivable was $2,237 Mil.
Revenue was 2863 + 2910 + 2905 + 2723 = $11,401 Mil.
Gross Profit was 2760 + 2808 + 2800 + 2624 = $10,992 Mil.
Total Current Assets was $8,468 Mil.
Total Assets was $225,261 Mil.
Property, Plant and Equipment(Net PPE) was $581 Mil.
Depreciation, Depletion and Amortization(DDA) was $247 Mil.
Selling, General & Admin. Expense(SGA) was $6,152 Mil.
Total Current Liabilities was $3,039 Mil.
Long-Term Debt was $4,930 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)
=(2350 / 11155) / (2237 / 11401)
=0.21066786 / 0.19621086
=1.0737

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)
=(10992 / 11401) / (10726 / 11155)
=0.96412595 / 0.96154191
=1.0027

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 - (8525 + 559) / 220177) / (1 - (8468 + 581) / 225261)
=0.95874228 / 0.95982882
=0.9989

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
=11155 / 11401
=0.9784

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))
=(247 / (247 + 581)) / (229 / (229 + 559))
=0.29830918 / 0.29060914
=1.0265

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)
=(5947 / 11155) / (6152 / 11401)
=0.53312416 / 0.53960179
=0.988

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)
=((4915 + 2974) / 220177) / ((4930 + 3039) / 225261)
=0.03583026 / 0.03537674
=1.0128

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
=(3172 - 55 - 2154) / 220177
=0.0044

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.

BlackRock Inc has a M-score of -2.41 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.

BlackRock Inc Annual Data

Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15Dec16
DSRI 0.5550.69742.06880.66090.88721.11650.9160.86681.02561.0737
GMI 00.99711.01670.86860.61930.99630.99550.99811.00311.0027
AQI 0.99870.83411.1651.00610.99940.99551.00580.99740.99550.9989
SGI 2.30941.04520.92811.83231.05451.02821.09031.08851.02890.9784
DEPI 0.59160.90761.34950.83181.17451.0330.97090.95571.25091.0265
SGAI 0.90370.81931.2641.15332.65820.98391.00830.96230.99160.988
LVGI 1.72883.13280.36030.711.43611.11560.85551.01530.75561.0128
TATA -0.0043-0.028-0.0032-0.0032-0.00290.0005-0.00460.00040.0010.0044
M-score -2.54-3.59-1.30-2.08-3.16-2.38-2.46-2.53-2.32-2.41

BlackRock Inc Quarterly Data

Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16Dec16Mar17
DSRI 0.86680.92370.52990.9451.02560.87751.23581.0411.0737
GMI 0.99810.99981.0021.00361.00311.00251.00211.00261.0027
AQI 0.99741.00421.01131.00260.99550.99590.99381.00110.9989
SGI 1.08851.07051.05271.02241.02891.01510.99470.98290.9784
DEPI 0.95571.09641.14431.18721.25091.13891.12431.14341.0265
SGAI 0.96230.97120.98450.9820.99160.99021.00551.0090.988
LVGI 1.01530.96240.56250.66240.75560.67681.10510.97281.0128
TATA 0.00040.00170.00090.00040.00080.00090.0030.00420.0044
M-score -2.53-2.45-2.69-2.37-2.32-2.45-2.28-2.41-2.41
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