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Morningstar Inc (NAS:MORN)
Beneish M-Score
-2.78 (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 -2.78 suggests that the company is not a manipulator.

MORN' s 10-Year Beneish M-Score Range
Min: -2.78   Max: -2.2
Current: -2.78

-2.78
-2.2

During the past 13 years, the highest Beneish M-Score of Morningstar Inc was -2.20. The lowest was -2.78. And the median was -2.56.


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 * 0.9999+0.528 * 1.0626+0.404 * 1.0045+0.892 * 1.0818+0.115 * 0.9425
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9564+4.679 * -0.0771-0.327 * 1.1617
=-2.78

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

This Year (Mar15) TTM:Last Year (Mar14) TTM:
Accounts Receivable was $142.2 Mil.
Revenue was 189.8 + 196.415 + 193.106 + 189.385 = $768.7 Mil.
Gross Profit was 111.1 + 115.02 + 112.964 + 107.998 = $447.1 Mil.
Total Current Assets was $418.5 Mil.
Total Assets was $1,025.8 Mil.
Property, Plant and Equipment(Net PPE) was $121.4 Mil.
Depreciation, Depletion and Amortization(DDA) was $57.6 Mil.
Selling, General & Admin. Expense(SGA) was $216.9 Mil.
Total Current Liabilities was $293.2 Mil.
Long-Term Debt was $0.0 Mil.
Net Income was 29.7 + 31.514 + 30.18 + -9.769 = $81.6 Mil.
Non Operating Income was -0.6 + 1.523 + -0.813 + 5.264 = $5.4 Mil.
Cash Flow from Operations was 35 + 56.933 + 8.6 + 54.788 = $155.3 Mil.
Accounts Receivable was $131.5 Mil.
Revenue was 181.2 + 180.5 + 173.482 + 175.428 = $710.6 Mil.
Gross Profit was 105.4 + 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 $46.8 Mil.
Selling, General & Admin. Expense(SGA) was $209.7 Mil.
Total Current Liabilities was $247.9 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)
=(142.2 / 768.706) / (131.464 / 710.61)
=0.1849862 / 0.18500162
=0.9999

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)
=(115.02 / 710.61) / (111.1 / 768.706)
=0.61802817 / 0.58160337
=1.0626

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 - (418.5 + 121.4) / 1025.8) / (1 - (424.942 + 107.438) / 1007.417)
=0.47367908 / 0.47153959
=1.0045

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
=768.706 / 710.61
=1.0818

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))
=(46.754 / (46.754 + 107.438)) / (57.586 / (57.586 + 121.4))
=0.30321936 / 0.32173466
=0.9425

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)
=(216.921 / 768.706) / (209.675 / 710.61)
=0.28218981 / 0.2950634
=0.9564

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 + 293.2) / 1025.8) / ((0 + 247.857) / 1007.417)
=0.2858257 / 0.24603218
=1.1617

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
=(81.625 - 5.374 - 155.321) / 1025.8
=-0.0771

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 -2.78 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 0.97080.98950.98040.99651.01311.021.00791.01181.15051.0525
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 0.70180.95650.89720.86550.77751.03050.99251.06971.1011.0598
TATA -0.0645-0.11-0.0578-0.0727-0.0207-0.0381-0.0563-0.0343-0.0658-0.059
M-score -2.38-2.36-2.46-2.64-2.54-2.37-2.76-2.59-2.71-2.55

Morningstar Inc Quarterly Data

Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14Dec14Mar15
DSRI 0.9680.93210.90290.89030.94091.0471.13821.01681.10060.9999
GMI 1.01180.98620.97621.02161.08011.14931.22441.17051.12121.0626
AQI 1.10541.05921.05260.97841.00151.04111.10681.12551.06011.0045
SGI 1.04261.04061.04731.06521.06071.06641.07211.08111.08861.0818
DEPI 1.13921.13211.11641.12951.1181.07271.03870.99190.95280.9425
SGAI 0.97240.97160.98550.96710.91130.9080.89690.94210.95980.9564
LVGI 1.06971.05431.02830.96981.1011.05761.25731.19951.05981.1617
TATA -0.0343-0.0456-0.0544-0.0574-0.0658-0.0559-0.0917-0.057-0.059-0.0771
M-score -2.59-2.70-2.77-2.76-2.75-2.54-2.62-2.57-2.51-2.78
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