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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 -3.76. And the median was -2.31.
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 * 1.0493||+||0.528 * 0.971||+||0.404 * 0.8997||+||0.892 * 1.018||+||0.115 * 1.1346|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.007||+||4.679 * -0.0425||-||0.327 * 1.0156|
|This Year (Sep15) TTM:||Last Year (Sep14) TTM:|
|Accounts Receivable was $114 Mil.|
Revenue was 577.232 + 487.543 + 522.09 + 667.07 = $2,254 Mil.
Gross Profit was 353.804 + 261.603 + 287.416 + 357.705 = $1,261 Mil.
Total Current Assets was $358 Mil.
Total Assets was $5,966 Mil.
Property, Plant and Equipment(Net PPE) was $4,681 Mil.
Depreciation, Depletion and Amortization(DDA) was $163 Mil.
Selling, General & Admin. Expense(SGA) was $150 Mil.
Total Current Liabilities was $469 Mil.
Long-Term Debt was $3,407 Mil.
Net Income was 252.706 + 177.391 + 183.636 + 244.489 = $858 Mil.
Non Operating Income was -2.346 + 5.899 + -0.866 + -9.139 = $-6 Mil.
Cash Flow from Operations was 309.285 + 223.736 + 191.083 + 393.986 = $1,118 Mil.
|Accounts Receivable was $106 Mil.
Revenue was 521.601 + 496.446 + 618.606 + 577.438 = $2,214 Mil.
Gross Profit was 297.623 + 262.469 + 347.069 + 295.222 = $1,202 Mil.
Total Current Assets was $402 Mil.
Total Assets was $5,311 Mil.
Property, Plant and Equipment(Net PPE) was $3,992 Mil.
Depreciation, Depletion and Amortization(DDA) was $159 Mil.
Selling, General & Admin. Expense(SGA) was $146 Mil.
Total Current Liabilities was $394 Mil.
Long-Term Debt was $3,004 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)|
|=||(113.76 / 2253.935)||/||(106.495 / 2214.091)|
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)|
|=||(261.603 / 2214.091)||/||(353.804 / 2253.935)|
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 - (358.156 + 4680.65) / 5966.183)||/||(1 - (401.98 + 3991.746) / 5311.396)|
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))|
|=||(158.904 / (158.904 + 3991.746))||/||(163.459 / (163.459 + 4680.65))|
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)|
|=||(149.719 / 2253.935)||/||(146.044 / 2214.091)|
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)|
|=||((3407.114 + 468.562) / 5966.183)||/||((3003.707 + 393.653) / 5311.396)|
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|
|=||(858.222 - -6.452||-||1118.09)||/||5966.183|
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 -2.66 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