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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 -2.39.
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 * 0.7657||+||0.528 * 0.9381||+||0.404 * 1.8042||+||0.892 * 1.2143||+||0.115 * 0.9403|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.934||+||4.679 * -0.0343||-||0.327 * 1.0106|
|This Year (Sep14) TTM:||Last Year (Sep13) TTM:|
|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.
Net Income was 198.62 + 146.26 + 242.554 + 190.007 = $777 Mil.
Non Operating Income was -0.566 + -0.602 + -0.599 + 1.62 = $-0 Mil.
Cash Flow from Operations was 235.959 + 207.282 + 270.074 + 246.508 = $960 Mil.
|Accounts Receivable was $115 Mil.
Revenue was 443.835 + 443.912 + 432.421 + 503.195 = $1,823 Mil.
Gross Profit was 220.274 + 251.169 + 206.842 + 250.612 = $929 Mil.
Total Current Assets was $387 Mil.
Total Assets was $4,548 Mil.
Property, Plant and Equipment(Net PPE) was $3,725 Mil.
Depreciation, Depletion and Amortization(DDA) was $139 Mil.
Selling, General & Admin. Expense(SGA) was $129 Mil.
Total Current Liabilities was $642 Mil.
Long-Term Debt was $2,237 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)|
|=||(106.495 / 2214.091)||/||(114.537 / 1823.363)|
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)|
|=||(262.469 / 1823.363)||/||(297.623 / 2214.091)|
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 - (401.98 + 3991.746) / 5311.396)||/||(1 - (387.281 + 3725.186) / 4548.005)|
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))|
|=||(139.112 / (139.112 + 3725.186))||/||(158.904 / (158.904 + 3991.746))|
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)|
|=||(146.044 / 2214.091)||/||(128.767 / 1823.363)|
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)|
|=||((3003.707 + 393.653) / 5311.396)||/||((2236.761 + 641.76) / 4548.005)|
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|
|=||(777.441 - -0.147||-||959.823)||/||5311.396|
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 -2.37 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