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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
-2.55 (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 -2.55 suggests that the company is not a manipulator.

MMP' s Beneish M-Score Range Over the Past 10 Years
Min: -3.77   Max: 7.94
Current: -2.55

-3.77
7.94

During the past 13 years, the highest Beneish M-Score of Magellan Midstream Partners LP was 7.94. The lowest was -3.77. 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 * 1.1988+0.528 * 0.9858+0.404 * 1.0092+0.892 * 0.9249+0.115 * 1.0237
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.094+4.679 * -0.0318-0.327 * 1.0583
=-2.55

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

This Year (Sep16) TTM:Last Year (Sep15) TTM:
Accounts Receivable was $126 Mil.
Revenue was 551.782 + 518.897 + 519.816 + 573.048 = $2,164 Mil.
Gross Profit was 298.254 + 289.032 + 282.998 + 312.455 = $1,183 Mil.
Total Current Assets was $648 Mil.
Total Assets was $6,920 Mil.
Property, Plant and Equipment(Net PPE) was $5,186 Mil.
Depreciation, Depletion and Amortization(DDA) was $177 Mil.
Selling, General & Admin. Expense(SGA) was $151 Mil.
Total Current Liabilities was $684 Mil.
Long-Term Debt was $4,074 Mil.
Net Income was 194.551 + 187.859 + 207.07 + 207.123 = $797 Mil.
Non Operating Income was 3.324 + 3.169 + 29.17 + -3.539 = $32 Mil.
Cash Flow from Operations was 231.927 + 197.5 + 209.568 + 345.588 = $985 Mil.
Accounts Receivable was $114 Mil.
Revenue was 586.675 + 498.428 + 530.302 + 723.699 = $2,339 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.



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)
=(126.141 / 2163.543) / (113.76 / 2339.104)
=0.05830298 / 0.04863401
=1.1988

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)
=(1260.528 / 2339.104) / (1182.739 / 2163.543)
=0.53889353 / 0.54666767
=0.9858

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 - (648.275 + 5186.042) / 6919.785) / (1 - (358.156 + 4680.65) / 5966.183)
=0.15686441 / 0.15543891
=1.0092

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
=2163.543 / 2339.104
=0.9249

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))
=(163.459 / (163.459 + 4680.65)) / (176.769 / (176.769 + 5186.042))
=0.03374387 / 0.032962
=1.0237

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)
=(151.493 / 2163.543) / (149.719 / 2339.104)
=0.07002079 / 0.06400699
=1.094

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)
=((4073.502 + 683.849) / 6919.785) / ((3407.114 + 468.562) / 5966.183)
=0.68749983 / 0.64960729
=1.0583

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
=(796.603 - 32.124 - 984.583) / 6919.785
=-0.0318

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 -2.55 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

Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15
DSRI 0.88371.120.64682.32780.82260.7971.23731.02290.59931.0712
GMI 0.93480.92780.780.89871.20560.92550.94830.8880.93270.965
AQI 0.86150.96320.73520.70042.24831.08741.2721.82961.32771.0456
SGI 1.07611.0780.92010.83561.53571.12281.01341.09911.21180.9272
DEPI 0.97960.82831.17891.03471.03320.91961.00911.01650.97311.0765
SGAI 1.02021.03471.06431.37210.73850.9221.09411.10190.92351.1007
LVGI 1.02891.01730.91371.22290.97191.03781.03521.01150.99881.0144
TATA -0.0556-0.1138-0.1462-0.0691-0.0301-0.0405-0.0472-0.0396-0.0471-0.0416
M-score -2.88-2.92-3.75-2.04-1.64-2.76-2.41-2.30-2.77-2.69

Magellan Midstream Partners LP Quarterly Data

Jun14Sep14Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16
DSRI 0.82510.74880.59930.89660.88831.0341.07120.96731.13961.1988
GMI 0.96340.95930.93270.98390.97160.98540.9650.95410.94030.9858
AQI 2.02591.80421.32771.12070.91870.89971.04561.04291.07261.0092
SGI 1.28211.24181.21181.06471.04011.03310.92720.95860.96680.9249
DEPI 0.95880.94030.97310.97261.12571.13461.07651.09381.02731.0237
SGAI 0.90530.91330.92351.01770.98870.99231.10071.09821.07521.094
LVGI 1.02561.01060.99881.00321.01831.01561.01441.02981.02751.0583
TATA -0.0402-0.0339-0.048-0.0436-0.0414-0.0435-0.0416-0.0432-0.0366-0.0318
M-score -2.18-2.35-2.78-2.69-2.78-2.66-2.69-2.77-2.57-2.55
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