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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, L.P. was 7.94. The lowest was -4.75. And the median was -2.41.
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, L.P. 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 * 0.9013||+||0.528 * 0.9788||+||0.404 * 1.1207||+||0.892 * 1.0592||+||0.115 * 0.9726|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.023||+||4.679 * -0.0422||-||0.327 * 1.0032|
* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.
|This Year (Mar15) TTM:||Last Year (Mar14) TTM:|
|Accounts Receivable was $97 Mil.|
Revenue was 522.09 + 667.07 + 521.601 + 496.446 = $2,207 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.
Net Income was 183.636 + 252.085 + 198.62 + 146.26 = $781 Mil.
Non Operating Income was -0.866 + -9.139 + -0.566 + -0.602 = $-11 Mil.
Cash Flow from Operations was 191.083 + 393.986 + 235.959 + 207.282 = $1,028 Mil.
|Accounts Receivable was $101 Mil.
Revenue was 618.606 + 577.438 + 443.835 + 443.912 = $2,084 Mil.
Gross Profit was 347.069 + 295.222 + 220.274 + 251.169 = $1,114 Mil.
Total Current Assets was $567 Mil.
Total Assets was $5,144 Mil.
Property, Plant and Equipment(Net PPE) was $3,914 Mil.
Depreciation, Depletion and Amortization(DDA) was $143 Mil.
Selling, General & Admin. Expense(SGA) was $137 Mil.
Total Current Liabilities was $604 Mil.
Long-Term Debt was $2,691 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)|
|=||(96.7 / 2207.207)||/||(101.292 / 2083.791)|
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)|
|=||(357.705 / 2083.791)||/||(287.416 / 2207.207)|
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 - (395.65 + 4399.594) / 5605.117)||/||(1 - (567.042 + 3913.595) / 5143.782)|
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))|
|=||(143.409 / (143.409 + 3913.595))||/||(165.927 / (165.927 + 4399.594))|
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)|
|=||(148.851 / 2207.207)||/||(137.375 / 2083.791)|
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)|
|=||((3183.75 + 418.887) / 5605.117)||/||((2691.288 + 604.15) / 5143.782)|
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|
|=||(780.601 - -11.173||-||1028.31)||/||5605.117|
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, L.P. has a M-score of -2.69 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, L.P. Annual Data
Magellan Midstream Partners, L.P. Quarterly Data