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Morningstar Inc (NAS:MORN)
Beneish M-Score
-2.81 (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 -2.80 suggests that the company is not a manipulator.

MORN' s Beneish M-Score Range Over the Past 10 Years
Min: -3.03   Max: -2.2
Current: -2.81

-3.03
-2.2

During the past 13 years, the highest Beneish M-Score of Morningstar Inc was -2.20. The lowest was -3.03. 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 * 0.996+0.528 * 1.0288+0.404 * 1.0008+0.892 * 1.0056+0.115 * 1.065
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9441+4.679 * -0.0674-0.327 * 1.1119
=-2.80

* 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 $124.3 Mil.
Revenue was 196.1 + 198.2 + 192.1 + 201.6 = $788.0 Mil.
Gross Profit was 111.2 + 112.1 + 106.8 + 116.7 = $446.8 Mil.
Total Current Assets was $413.1 Mil.
Total Assets was $1,059.5 Mil.
Property, Plant and Equipment(Net PPE) was $150.0 Mil.
Depreciation, Depletion and Amortization(DDA) was $68.6 Mil.
Selling, General & Admin. Expense(SGA) was $197.2 Mil.
Total Current Liabilities was $314.2 Mil.
Long-Term Debt was $0.0 Mil.
Net Income was 30.2 + 31.8 + 28.7 + 37.3 = $128.0 Mil.
Non Operating Income was 2.1 + 2.9 + 0.3 + 0.6 = $5.9 Mil.
Cash Flow from Operations was 60.4 + 71.4 + 11.4 + 50.3 = $193.5 Mil.
Accounts Receivable was $124.1 Mil.
Revenue was 195.3 + 202.1 + 189.8 + 196.4 = $783.6 Mil.
Gross Profit was 111.9 + 118.9 + 111.1 + 115.2 = $457.1 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.



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)
=(124.3 / 788) / (124.1 / 783.6)
=0.15774112 / 0.15837162
=0.996

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)
=(457.1 / 783.6) / (446.8 / 788)
=0.58333333 / 0.56700508
=1.0288

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 - (413.1 + 150) / 1059.5) / (1 - (420.1 + 124.3) / 1023.6)
=0.46852289 / 0.46815162
=1.0008

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 / 783.6
=1.0056

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))
=(62.4 / (62.4 + 124.3)) / (68.6 / (68.6 + 150))
=0.33422603 / 0.31381519
=1.065

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)
=(197.2 / 788) / (207.7 / 783.6)
=0.25025381 / 0.2650587
=0.9441

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 + 314.2) / 1059.5) / ((0 + 273) / 1023.6)
=0.29655498 / 0.26670574
=1.1119

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
=(128 - 5.9 - 193.5) / 1059.5
=-0.0674

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 -2.80 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.

Morningstar Inc Annual Data

Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15
DSRI 0.98810.96480.89310.96451.16170.89880.9680.94081.10040.9819
GMI 0.98950.98040.99651.01311.021.14321.00361.02251.05250.9988
AQI 1.7690.93141.01911.09591.05340.88191.10541.00151.06940.948
SGI 1.38771.38051.15480.95331.15941.13691.04261.06081.08851.0378
DEPI 0.66450.92191.71820.88020.89341.00911.13921.11790.95290.983
SGAI 0.86661.00740.97860.97641.04541.00320.97240.91140.96020.8922
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

Jun14Sep14Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16
DSRI 1.13811.01671.100410.98830.94320.98191.0120.94710.996
GMI 1.08881.06921.05231.0280.99290.99980.99931.01331.03171.0288
AQI 1.10681.12551.06941.00450.91190.91980.9481.01871.02041.0008
SGI 1.07221.08111.08851.08171.07841.05291.03781.02911.00741.0056
DEPI 1.03820.99230.95290.94240.93190.94710.9830.97611.02831.065
SGAI 0.89650.9420.96020.95670.92630.89730.89220.8960.9270.9441
LVGI 1.25731.19951.1121.16170.94990.93541.01731.0971.07291.1119
TATA -0.0918-0.0571-0.0596-0.0771-0.053-0.1184-0.1049-0.0835-0.0783-0.0674
M-score -2.69-2.63-2.57-2.80-2.69-3.04-2.96-2.84-2.87-2.80
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