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Morningstar Inc (NAS:MORN)
Beneish M-Score
-2.61 (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 -2.61 suggests that the company is not a manipulator.

MORN' s 10-Year Beneish M-Score Range
Min: -2.83   Max: -2.31
Current: -2.61

-2.83
-2.31

During the past 13 years, the highest Beneish M-Score of Morningstar Inc was -2.31. The lowest was -2.83. And the median was -2.61.


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 * 1.0239+0.528 * 1.0538+0.404 * 1.0411+0.892 * 1.0663+0.115 * 1.0729
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9082+4.679 * -0.0559-0.327 * 1.0576
=-2.61

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

This Year (Mar14) TTM:Last Year (Mar13) TTM:
Accounts Receivable was $131.5 Mil.
Revenue was 181.165 + 180.5 + 173.482 + 175.428 = $710.6 Mil.
Gross Profit was 105.451 + 107.562 + 101.06 + 125.155 = $439.2 Mil.
Total Current Assets was $424.9 Mil.
Total Assets was $1,007.4 Mil.
Property, Plant and Equipment(Net PPE) was $107.4 Mil.
Depreciation, Depletion and Amortization(DDA) was $46.7 Mil.
Selling, General & Admin. Expense(SGA) was $209.7 Mil.
Total Current Liabilities was $247.9 Mil.
Long-Term Debt was $0.0 Mil.
Net Income was 26.376 + 31.327 + 31.463 + 31.121 = $120.3 Mil.
Non Operating Income was 0.28 + 1.852 + 0.141 + 2.447 = $4.7 Mil.
Cash Flow from Operations was 11.884 + 54.445 + 47.078 + 58.462 = $171.9 Mil.
Accounts Receivable was $120.4 Mil.
Revenue was 168.856 + 170.609 + 160.952 + 165.968 = $666.4 Mil.
Gross Profit was 107.206 + 109.969 + 100.384 + 116.516 = $434.1 Mil.
Total Current Assets was $480.2 Mil.
Total Assets was $1,045.5 Mil.
Property, Plant and Equipment(Net PPE) was $91.8 Mil.
Depreciation, Depletion and Amortization(DDA) was $44.3 Mil.
Selling, General & Admin. Expense(SGA) was $216.5 Mil.
Total Current Liabilities was $243.2 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)
=(131.464 / 710.575) / (120.416 / 666.385)
=0.18501073 / 0.18070035
=1.0239

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)
=(107.562 / 666.385) / (105.451 / 710.575)
=0.65138771 / 0.61813039
=1.0538

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 - (424.942 + 107.438) / 1007.417) / (1 - (480.178 + 91.815) / 1045.549)
=0.47153959 / 0.45292569
=1.0411

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
=710.575 / 666.385
=1.0663

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))
=(44.26 / (44.26 + 91.815)) / (46.741 / (46.741 + 107.438))
=0.3252618 / 0.30316061
=1.0729

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)
=(209.707 / 710.575) / (216.544 / 666.385)
=0.29512296 / 0.32495329
=0.9082

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 + 247.857) / 1007.417) / ((0 + 243.232) / 1045.549)
=0.24603218 / 0.23263568
=1.0576

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
=(120.287 - 4.72 - 171.869) / 1007.417
=-0.0559

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 -2.61 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

Dec04Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13
DSRI 1.17891.11670.98811.06480.89240.93361.19110.87531.02170.8654
GMI 0.98930.97080.98950.98040.99651.01311.021.00791.13831.0226
AQI 0.85320.87171.7690.93141.01911.09591.05340.88191.10541.0015
SGI 1.28791.26411.38771.38051.15480.95331.15941.13691.04261.0607
DEPI 0.91280.99020.66450.92191.71820.88020.89341.00911.13921.118
SGAI 0.75710.84340.86661.00740.97860.97641.04541.00320.97240.9113
LVGI 0.91660.70180.95650.89720.86550.77751.03050.99251.06971.101
TATA -0.1195-0.0645-0.11-0.0578-0.0727-0.0207-0.0381-0.0563-0.0343-0.0658
M-score -2.62-2.38-2.36-2.37-2.64-2.57-2.34-2.78-2.47-2.85

Morningstar Inc Quarterly Data

Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14
DSRI 0.90630.92831.00291.02170.92610.89530.87870.86541.02391.2234
GMI 1.02451.03461.05941.07111.07541.06281.05151.05191.05381.1245
AQI 0.91320.98381.05451.10541.05921.05260.97841.00151.04111.1059
SGI 1.10641.06891.03571.04261.04061.04731.06521.06071.06631.072
DEPI 1.0761.13481.14051.13921.13211.11641.12951.1181.07291.0387
SGAI 0.95740.96210.94110.97240.97160.98550.96710.91130.90820.8971
LVGI 1.03611.111.11531.06971.05431.02830.96981.1011.05761.2584
TATA -0.0507-0.054-0.0451-0.0343-0.0456-0.0544-0.0574-0.0658-0.0559-0.0917
M-score -2.73-2.74-2.61-2.50-2.66-2.73-2.75-2.83-2.61-2.59
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