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Morningstar Inc (NAS:MORN)
Beneish M-Score
-3.02 (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.

Morningstar Inc has a M-score of -3.02 suggests that the company is not a manipulator.

MORN' s Beneish M-Score Range Over the Past 10 Years
Min: -3.02   Max: -2.2
Current: -3.02

-3.02
-2.2

During the past 13 years, the highest Beneish M-Score of Morningstar Inc was -2.20. The lowest was -3.02. And the median was -2.57.


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 Morningstar Inc 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 * 0.9432+0.528 * 0.9998+0.404 * 0.9198+0.892 * 1.0529+0.115 * 0.9471
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.8971+4.679 * -0.1142-0.327 * 0.9354
=-3.02

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.

This Year (Sep15) TTM:Last Year (Sep14) TTM:
Accounts Receivable was $124.1 Mil.
Revenue was 195.3 + 202.1 + 189.8 + 196.371 = $783.6 Mil.
Gross Profit was 111.9 + 118.9 + 111.1 + 115.133 = $457.0 Mil.
Total Current Assets was $420.1 Mil.
Total Assets was $1,023.6 Mil.
Property, Plant and Equipment(Net PPE) was $124.3 Mil.
Depreciation, Depletion and Amortization(DDA) was $62.4 Mil.
Selling, General & Admin. Expense(SGA) was $207.7 Mil.
Total Current Liabilities was $273.0 Mil.
Long-Term Debt was $0.0 Mil.
Net Income was 33.5 + 32.2 + 29.7 + 31.501 = $126.9 Mil.
Non Operating Income was 0 + 0.5 + -0.6 + 0.486 = $0.4 Mil.
Cash Flow from Operations was 75.6 + 75.9 + 35 + 56.921 = $243.4 Mil.
Accounts Receivable was $125.0 Mil.
Revenue was 193.1 + 189.4 + 181.2 + 180.5 = $744.2 Mil.
Gross Profit was 113.1 + 107.9 + 105.4 + 107.562 = $434.0 Mil.
Total Current Assets was $388.3 Mil.
Total Assets was $1,020.2 Mil.
Property, Plant and Equipment(Net PPE) was $112.6 Mil.
Depreciation, Depletion and Amortization(DDA) was $52.1 Mil.
Selling, General & Admin. Expense(SGA) was $219.8 Mil.
Total Current Liabilities was $290.9 Mil.
Long-Term Debt was $0.0 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)
=(124.1 / 783.571) / (124.966 / 744.2)
=0.15837748 / 0.16791991
=0.9432

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)
=(118.9 / 744.2) / (111.9 / 783.571)
=0.5831255 / 0.58326942
=0.9998

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 - (420.1 + 124.3) / 1023.6) / (1 - (388.344 + 112.584) / 1020.175)
=0.46815162 / 0.50897836
=0.9198

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
=783.571 / 744.2
=1.0529

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))
=(52.135 / (52.135 + 112.584)) / (62.386 / (62.386 + 124.3))
=0.31650872 / 0.3341761
=0.9471

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)
=(207.653 / 783.571) / (219.83 / 744.2)
=0.26500853 / 0.29539102
=0.8971

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)
=((0 + 273) / 1023.6) / ((0 + 290.887) / 1020.175)
=0.26670574 / 0.28513441
=0.9354

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
=(126.901 - 0.386 - 243.421) / 1023.6
=-0.1142

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.

Morningstar Inc has a M-score of -3.02 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 own currency.

Morningstar Inc Annual Data

Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14
DSRI 1.11670.98810.96480.89310.96451.16170.89880.9680.94091.1006
GMI 0.97080.98950.98040.99651.01311.021.14321.00361.02261.0525
AQI 0.87171.7690.93141.01911.09591.05340.88191.10541.00151.0601
SGI 1.26411.38771.38051.15480.95331.15941.13691.04261.06071.0885
DEPI 0.99020.66450.92191.71820.88020.89341.00911.13921.1180.9528
SGAI 0.84340.86661.00740.97860.97641.04541.00320.97240.91130.96
LVGI 0.70180.95650.89720.86550.77751.03050.99251.06971.05881.102
TATA -0.0645-0.11-0.0578-0.0727-0.0207-0.0381-0.0563-0.0369-0.0689-0.059
M-score -2.38-2.36-2.46-2.64-2.54-2.37-2.68-2.60-2.78-2.56

Morningstar Inc Quarterly Data

Jun13Sep13Dec13Mar14Jun14Sep14Dec14Mar15Jun15Sep15
DSRI 0.90290.89030.94091.0471.13821.01671.100610.98830.9432
GMI 0.9680.95431.08681.08911.0891.06931.05231.0280.99290.9998
AQI 1.05260.97841.00151.04111.10681.12551.06011.00450.91190.9198
SGI 1.04731.06521.06071.06641.07211.08111.08851.08171.07841.0529
DEPI 1.11641.12951.1181.07271.03830.99240.95280.94250.9320.9471
SGAI 0.98550.96710.91130.9080.89650.94190.960.95660.92620.8971
LVGI 1.02830.96981.05881.05761.25731.19951.1021.16170.94990.9354
TATA -0.057-0.0597-0.0667-0.0569-0.0927-0.0593-0.0591-0.0771-0.051-0.1142
M-score -2.78-2.80-2.74-2.57-2.69-2.64-2.57-2.80-2.68-3.02
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