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Morningstar Inc (NAS:MORN)
Beneish M-Score
-2.56 (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 -2.56 suggests that the company is not a manipulator.

MORN' s 10-Year Beneish M-Score Range
Min: -2.75   Max: -2.36
Current: -2.56

-2.75
-2.36

During the past 13 years, the highest Beneish M-Score of Morningstar Inc was -2.36. The lowest was -2.75. And the median was -2.55.


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 * 1.1006+0.528 * 1.0525+0.404 * 1.0601+0.892 * 1.0885+0.115 * 0.9528
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.96+4.679 * -0.059-0.327 * 1.102
=-2.56

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

This Year (Dec14) TTM:Last Year (Dec13) TTM:
Accounts Receivable was $136.7 Mil.
Revenue was 196.415 + 193.106 + 189.385 + 181.165 = $760.1 Mil.
Gross Profit was 115.02 + 112.964 + 107.998 + 105.451 = $441.4 Mil.
Total Current Assets was $399.8 Mil.
Total Assets was $1,019.3 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.
Net Income was 31.514 + 30.18 + -9.769 + 26.376 = $78.3 Mil.
Non Operating Income was 1.523 + -0.813 + 5.264 + 0.28 = $6.3 Mil.
Cash Flow from Operations was 56.933 + 8.6 + 54.804 + 11.884 = $132.2 Mil.
Accounts Receivable was $114.1 Mil.
Revenue was 180.5 + 173.482 + 175.428 + 168.856 = $698.3 Mil.
Gross Profit was 107.562 + 101.06 + 111.001 + 107.206 = $426.8 Mil.
Total Current Assets was $446.9 Mil.
Total Assets was $1,030.7 Mil.
Property, Plant and Equipment(Net PPE) was $105.0 Mil.
Depreciation, Depletion and Amortization(DDA) was $45.7 Mil.
Selling, General & Admin. Expense(SGA) was $210.5 Mil.
Total Current Liabilities was $269.5 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)
=(136.735 / 760.071) / (114.131 / 698.266)
=0.17989767 / 0.16344917
=1.1006

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)
=(112.964 / 698.266) / (115.02 / 760.071)
=0.61126992 / 0.58077864
=1.0525

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 - (399.773 + 117.561) / 1019.281) / (1 - (446.893 + 104.986) / 1030.668)
=0.49245203 / 0.46454241
=1.0601

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
=760.071 / 698.266
=1.0885

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))
=(45.693 / (45.693 + 104.986)) / (54.886 / (54.886 + 117.561))
=0.3032473 / 0.3182775
=0.9528

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)
=(219.953 / 760.071) / (210.482 / 698.266)
=0.28938481 / 0.30143527
=0.96

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 + 293.759) / 1019.281) / ((0 + 269.545) / 1030.668)
=0.28820217 / 0.26152456
=1.102

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
=(78.301 - 6.254 - 132.221) / 1019.281
=-0.059

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 -2.56 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 0.97080.98950.98040.99651.01311.021.00791.13831.02261.0525
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 -0.0645-0.11-0.0578-0.0727-0.0207-0.0381-0.0563-0.0343-0.0658-0.059
M-score -2.38-2.36-2.46-2.64-2.54-2.37-2.76-2.52-2.77-2.56

Morningstar Inc Quarterly Data

Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14Dec14
DSRI 1.0480.9680.93210.90290.89030.94091.04711.13831.01681.1006
GMI 1.05941.07111.07541.09791.08621.08681.08891.08851.06921.0525
AQI 1.05451.10541.05921.05260.97841.00151.04111.10681.12551.0601
SGI 1.03571.04261.04061.04731.06521.06071.06631.0721.0811.0885
DEPI 1.14051.13921.13211.11641.12951.1181.07291.03870.99190.9528
SGAI 0.94110.97240.97160.98550.96710.91130.90820.89710.94230.96
LVGI 1.11531.06971.05431.02830.96981.05881.05761.25731.19951.102
TATA -0.0451-0.0343-0.0456-0.0544-0.0574-0.0658-0.0559-0.0917-0.0571-0.059
M-score -2.57-2.55-2.65-2.70-2.72-2.73-2.57-2.69-2.63-2.56
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