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Morningstar Inc (NAS:MORN)
Beneish M-Score
-2.96 (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 -2.96 suggests that the company is not a manipulator.

MORN' s Beneish M-Score Range Over the Past 10 Years
Min: -2.96   Max: -2.33
Current: -2.96

-2.96
-2.33

During the past 13 years, the highest Beneish M-Score of Morningstar Inc was -2.33. The lowest was -2.96. And the median was -2.60.


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 * 0.9819+0.528 * 0.9993+0.404 * 0.948+0.892 * 1.0378+0.115 * 0.983
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.8922+4.679 * -0.1049-0.327 * 1.0173
=-2.96

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

This Year (Dec15) TTM:Last Year (Dec14) TTM:
Accounts Receivable was $139.3 Mil.
Revenue was 201.6 + 195.3 + 202.1 + 189.8 = $788.8 Mil.
Gross Profit was 116.7 + 111.9 + 118.9 + 111.1 = $458.6 Mil.
Total Current Assets was $409.9 Mil.
Total Assets was $1,029.0 Mil.
Property, Plant and Equipment(Net PPE) was $134.5 Mil.
Depreciation, Depletion and Amortization(DDA) was $64.4 Mil.
Selling, General & Admin. Expense(SGA) was $203.7 Mil.
Total Current Liabilities was $304.4 Mil.
Long-Term Debt was $0.0 Mil.
Net Income was 37.3 + 33.5 + 32.2 + 29.7 = $132.7 Mil.
Non Operating Income was 0.6 + 1.2 + 0.5 + -0.6 = $1.7 Mil.
Cash Flow from Operations was 52.4 + 75.6 + 75.9 + 35 = $238.9 Mil.
Accounts Receivable was $136.7 Mil.
Revenue was 196.4 + 193.1 + 189.4 + 181.2 = $760.1 Mil.
Gross Profit was 115.2 + 113.1 + 107.9 + 105.4 = $441.6 Mil.
Total Current Assets was $390.8 Mil.
Total Assets was $1,010.3 Mil.
Property, Plant and Equipment(Net PPE) was $117.6 Mil.
Depreciation, Depletion and Amortization(DDA) was $54.9 Mil.
Selling, General & Admin. Expense(SGA) was $220.0 Mil.
Total Current Liabilities was $293.8 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)
=(139.3 / 788.8) / (136.7 / 760.1)
=0.17659736 / 0.17984476
=0.9819

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)
=(111.9 / 760.1) / (116.7 / 788.8)
=0.58097619 / 0.58138945
=0.9993

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 - (409.9 + 134.5) / 1029) / (1 - (390.8 + 117.6) / 1010.3)
=0.47094266 / 0.49678313
=0.948

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
=788.8 / 760.1
=1.0378

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))
=(54.9 / (54.9 + 117.6)) / (64.4 / (64.4 + 134.5))
=0.31826087 / 0.32378079
=0.983

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)
=(203.7 / 788.8) / (220 / 760.1)
=0.25824037 / 0.2894356
=0.8922

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 + 304.4) / 1029) / ((0 + 293.8) / 1010.3)
=0.29582119 / 0.29080471
=1.0173

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
=(132.7 - 1.7 - 238.9) / 1029
=-0.1049

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 -2.96 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

Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15
DSRI 0.98810.96480.89310.96451.16170.89880.9680.94091.10040.9819
GMI 0.98950.98040.99651.01311.021.14321.00361.02261.05250.9987
AQI 1.7690.93141.01911.09591.05340.88191.10541.00151.06940.948
SGI 1.38771.38051.15480.95331.15941.13691.04261.06071.08851.0378
DEPI 0.66450.92191.71820.88020.89341.00911.13921.1180.9530.9828
SGAI 0.86661.00740.97860.97641.04541.00320.97240.91130.960.8924
LVGI 0.95650.89720.86550.77751.03050.99251.06971.05881.1121.0173
TATA -0.1037-0.0578-0.0727-0.0207-0.0381-0.0563-0.0343-0.0658-0.0596-0.1051
M-score -2.33-2.46-2.64-2.54-2.37-2.68-2.59-2.77-2.57-2.97

Morningstar Inc Quarterly Data

Dec13Mar14Jun14Sep14Dec14Mar15Jun15Sep15Dec15Mar16
DSRI 0.94081.0471.13811.01671.100410.98830.94320.98191.012
GMI 1.08671.08891.08881.06921.05231.0280.99290.99980.99931.0133
AQI 1.00151.04111.10681.12551.06941.00450.91190.91980.9481.0187
SGI 1.06081.06641.07221.08111.08851.08171.07841.05291.03781.0291
DEPI 1.11791.07261.03820.99230.95290.94240.93190.94710.9830.9761
SGAI 0.91140.90810.89650.9420.96020.95670.92630.89730.89220.896
LVGI 1.05881.05761.25731.19951.1121.16170.94990.93541.01731.097
TATA -0.0658-0.0559-0.0918-0.0571-0.0596-0.0771-0.051-0.1164-0.1049-0.0835
M-score -2.73-2.57-2.69-2.63-2.57-2.80-2.68-3.03-2.96-2.84
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