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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.
During the past 13 years, the highest Beneish M-Score of Magellan Midstream Partners LP was 7.94. The lowest was -3.77. And the median was -2.36.
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 Magellan Midstream Partners LP 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 * 0.9636||+||0.528 * 0.9577||+||0.404 * 1.0429||+||0.892 * 0.9622||+||0.115 * 1.0938|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0941||+||4.679 * -0.0436||-||0.327 * 1.0298|
|This Year (Mar16) TTM:||Last Year (Mar15) TTM:|
|Accounts Receivable was $90 Mil.|
Revenue was 519.816 + 601.588 + 577.232 + 487.543 = $2,186 Mil.
Gross Profit was 282.998 + 312.455 + 353.804 + 261.603 = $1,211 Mil.
Total Current Assets was $516 Mil.
Total Assets was $6,392 Mil.
Property, Plant and Equipment(Net PPE) was $4,914 Mil.
Depreciation, Depletion and Amortization(DDA) was $169 Mil.
Selling, General & Admin. Expense(SGA) was $157 Mil.
Total Current Liabilities was $679 Mil.
Long-Term Debt was $3,552 Mil.
Net Income was 207.07 + 203.483 + 252.706 + 177.391 = $841 Mil.
Non Operating Income was 29.17 + -1.672 + -2.346 + 5.899 = $31 Mil.
Cash Flow from Operations was 209.568 + 345.588 + 309.285 + 223.736 = $1,088 Mil.
|Accounts Receivable was $97 Mil.
Revenue was 530.302 + 723.699 + 521.601 + 496.446 = $2,272 Mil.
Gross Profit was 287.416 + 357.705 + 297.623 + 262.469 = $1,205 Mil.
Total Current Assets was $396 Mil.
Total Assets was $5,605 Mil.
Property, Plant and Equipment(Net PPE) was $4,400 Mil.
Depreciation, Depletion and Amortization(DDA) was $166 Mil.
Selling, General & Admin. Expense(SGA) was $149 Mil.
Total Current Liabilities was $419 Mil.
Long-Term Debt was $3,184 Mil.
1. DSRI = Days Sales in Receivables Index
A large increase in DSR could be indicative of revenue inflation.
|DSRI||=||(Receivables_t / Revenue_t)||/||(Receivables_t-1 / Revenue_t-1)|
|=||(89.662 / 2186.179)||/||(96.7 / 2272.048)|
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.
|=||(GrossProfit_t-1 / Revenue_t-1)||/||(GrossProfit_t / Revenue_t)|
|=||(312.455 / 2272.048)||/||(282.998 / 2186.179)|
3. AQI = Asset Quality Index
AQI is the ratio of asset quality in year t to year t-1.
|AQI||=||(1 - (CurrentAssets_t + PPE_t) / TotalAssets_t)||/||(1 - (CurrentAssets_t-1 + PPE_t-1) / TotalAssets_t-1)|
|=||(1 - (515.531 + 4913.509) / 6392.314)||/||(1 - (395.65 + 4399.594) / 5605.117)|
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.
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))|
|=||(165.927 / (165.927 + 4399.594))||/||(168.869 / (168.869 + 4913.509))|
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)|
|=||(156.705 / 2186.179)||/||(148.851 / 2272.048)|
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)|
|=||((3552.032 + 679.094) / 6392.314)||/||((3183.75 + 418.887) / 5605.117)|
8. TATA = Total Accruals to Total Assets
Total accruals calculated as the change in working capital accounts other than cash less depreciation.
|=||(NetIncome_t - NonOperatingIncome_t||-||CashFlowsfromOperations_t)||/||TotalAssets_t|
|=||(840.65 - 31.051||-||1088.177)||/||6392.314|
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.
Magellan Midstream Partners LP has a M-score of -2.77 suggests that the company will not be a manipulator.
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
Magellan Midstream Partners LP Annual Data
Magellan Midstream Partners LP Quarterly Data