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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.
Magellan Midstream Partners, L.P. has a M-score of -2.26 suggests that the company is not a manipulator.
During the past 13 years, the highest Beneish M-Score of Magellan Midstream Partners, L.P. was -1.67. The lowest was -3.59. And the median was -2.47.
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 * 1.1082||+||0.528 * 0.8651||+||0.404 * 1.8296||+||0.892 * 1.0708||+||0.115 * 1.0165|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.131||+||4.679 * -0.0396||-||0.327 * 1.0115|
|This Year (Dec13) TTM:||Last Year (Dec12) TTM:|
|Accounts Receivable was $123 Mil.|
Revenue was 577.438 + 443.835 + 443.912 + 432.421 = $1,898 Mil.
Gross Profit was 295.222 + 220.274 + 251.169 + 206.842 = $974 Mil.
Total Current Assets was $397 Mil.
Total Assets was $4,821 Mil.
Property, Plant and Equipment(Net PPE) was $3,916 Mil.
Depreciation, Depletion and Amortization(DDA) was $142 Mil.
Selling, General & Admin. Expense(SGA) was $132 Mil.
Total Current Liabilities was $638 Mil.
Long-Term Debt was $2,435 Mil.
Net Income was 190.007 + 125.623 + 153.64 + 112.967 = $582 Mil.
Non Operating Income was 1.62 + -0.54 + -0.54 + 0 = $1 Mil.
Cash Flow from Operations was 251.459 + 179.234 + 172.229 + 169.778 = $773 Mil.
|Accounts Receivable was $103 Mil.
Revenue was 503.195 + 325.869 + 449.527 + 493.483 = $1,772 Mil.
Gross Profit was 250.612 + 136.778 + 222.703 + 176.419 = $787 Mil.
Total Current Assets was $700 Mil.
Total Assets was $4,420 Mil.
Property, Plant and Equipment(Net PPE) was $3,465 Mil.
Depreciation, Depletion and Amortization(DDA) was $128 Mil.
Selling, General & Admin. Expense(SGA) was $109 Mil.
Total Current Liabilities was $393 Mil.
Long-Term Debt was $2,393 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)|
|=||(122.757 / 1897.606)||/||(103.443 / 1772.074)|
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)|
|=||(220.274 / 1772.074)||/||(295.222 / 1897.606)|
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 - (396.733 + 3916.258) / 4820.812)||/||(1 - (700.278 + 3465.302) / 4420.067)|
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))|
|=||(128.012 / (128.012 + 3465.302))||/||(142.23 / (142.23 + 3916.258))|
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)|
|=||(132.496 / 1897.606)||/||(109.403 / 1772.074)|
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)|
|=||((2435.316 + 638.276) / 4820.812)||/||((2393.408 + 392.62) / 4420.067)|
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|
|=||(582.237 - 0.54||-||772.7)||/||4820.812|
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 -2.26 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