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GuruFocus has detected 6 Warning Signs with Magellan Midstream Partners LP $MMP.
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Magellan Midstream Partners LP (NYSE:MMP)
Beneish M-Score
-2.31 (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.

Magellan Midstream Partners LP has a M-score of -2.31 suggests that the company is not a manipulator.

MMP' s Beneish M-Score Range Over the Past 10 Years
Min: -3.2   Max: -0.5
Current: -2.31

-3.2
-0.5

During the past 13 years, the highest Beneish M-Score of Magellan Midstream Partners LP was -0.50. The lowest was -3.20. And the median was -2.38.


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 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 * 1.2501+0.528 * 1.0358+0.404 * 1.137+0.892 * 1.0077+0.115 * 1.0243
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9693+4.679 * -0.0292-0.327 * 1.0445
=-2.31

* 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 $106 Mil.
Revenue was 614.915 + 551.782 + 518.897 + 519.816 = $2,205 Mil.
Gross Profit was 312.029 + 298.254 + 289.032 + 282.998 = $1,182 Mil.
Total Current Assets was $370 Mil.
Total Assets was $6,772 Mil.
Property, Plant and Equipment(Net PPE) was $5,276 Mil.
Depreciation, Depletion and Amortization(DDA) was $178 Mil.
Selling, General & Admin. Expense(SGA) was $148 Mil.
Total Current Liabilities was $482 Mil.
Long-Term Debt was $4,087 Mil.
Net Income was 213.291 + 194.551 + 187.859 + 207.07 = $803 Mil.
Non Operating Income was 0.684 + 3.324 + 3.169 + 29.17 = $36 Mil.
Cash Flow from Operations was 325.045 + 231.927 + 197.5 + 209.568 = $964 Mil.
Accounts Receivable was $84 Mil.
Revenue was 601.588 + 577.232 + 487.543 + 522.09 = $2,188 Mil.
Gross Profit was 312.455 + 353.804 + 261.603 + 287.416 = $1,215 Mil.
Total Current Assets was $339 Mil.
Total Assets was $6,042 Mil.
Property, Plant and Equipment(Net PPE) was $4,819 Mil.
Depreciation, Depletion and Amortization(DDA) was $167 Mil.
Selling, General & Admin. Expense(SGA) was $151 Mil.
Total Current Liabilities was $713 Mil.
Long-Term Debt was $3,189 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)
=(105.689 / 2205.41) / (83.893 / 2188.453)
=0.04792261 / 0.03833439
=1.2501

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)
=(1215.278 / 2188.453) / (1182.313 / 2205.41)
=0.55531373 / 0.53609669
=1.0358

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 - (370.394 + 5275.741) / 6772.073) / (1 - (338.854 + 4819.229) / 6041.567)
=0.16626194 / 0.14623425
=1.137

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
=2205.41 / 2188.453
=1.0077

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))
=(166.812 / (166.812 + 4819.229)) / (178.142 / (178.142 + 5275.741))
=0.0334558 / 0.03266333
=1.0243

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)
=(147.815 / 2205.41) / (151.329 / 2188.453)
=0.06702382 / 0.06914885
=0.9693

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)
=((4087.192 + 481.656) / 6772.073) / ((3189.287 + 713.072) / 6041.567)
=0.67466018 / 0.64591835
=1.0445

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
=(802.771 - 36.347 - 964.04) / 6772.073
=-0.0292

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 -2.31 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.

Magellan Midstream Partners LP Annual Data

Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15Dec16
DSRI 1.12080.65332.30290.82260.89440.97121.25820.56681.04551.2501
GMI 0.93060.77970.89641.20560.92550.94830.86510.93440.98871.0358
AQI 0.96320.97530.52792.24831.08741.2721.82961.35121.02741.137
SGI 1.07730.92010.83621.53571.12281.01341.07081.2140.951.0077
DEPI 1.01921.00920.9931.00930.91771.02381.01650.97311.07651.0243
SGAI 1.0041.05461.4270.73850.9221.09411.1310.92191.07430.9693
LVGI 1.01731.03081.08390.97191.03781.03521.01151.00041.01271.0445
TATA -0.0063-0.0386-0.0462-0.0564-0.04-0.0474-0.0395-0.0466-0.0416-0.0292
M-score -2.39-3.20-1.99-1.76-2.67-2.66-2.12-2.79-2.68-2.31

Magellan Midstream Partners LP Quarterly Data

Sep14Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16Dec16
DSRI 0.76570.56680.90130.89791.04931.04550.93611.09211.14011.2501
GMI 0.93810.93440.97880.96120.9710.98870.98590.98111.03651.0358
AQI 1.80421.35121.12070.91870.89971.02741.04291.07261.00921.137
SGI 1.21431.2141.05921.0291.0180.950.99051.00870.97261.0077
DEPI 0.94030.97310.96911.12571.13461.07651.09381.02731.02371.0243
SGAI 0.9340.92191.0230.99931.0071.07431.06291.03051.04040.9693
LVGI 1.01061.00041.00321.01831.01561.01271.02981.02751.05831.0445
TATA -0.0352-0.0466-0.0422-0.0398-0.0412-0.042-0.0436-0.0371-0.0326-0.0292
M-score -2.38-2.79-2.69-2.78-2.66-2.68-2.75-2.55-2.53-2.31
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