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Morningstar Inc (NAS:MORN)
Beneish M-Score
-2.87 (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 -2.87 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: -2.87

-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 -2.61.


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 * 0.9471+0.528 * 1.0317+0.404 * 1.0204+0.892 * 1.0074+0.115 * 1.0283
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.927+4.679 * -0.0783-0.327 * 1.0729
=-2.87

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

This Year (Jun16) TTM:Last Year (Jun15) TTM:
Accounts Receivable was $137.3 Mil.
Revenue was 198.2 + 192.1 + 201.6 + 195.3 = $787.2 Mil.
Gross Profit was 112.1 + 106.8 + 116.7 + 111.9 = $447.5 Mil.
Total Current Assets was $409.0 Mil.
Total Assets was $1,052.0 Mil.
Property, Plant and Equipment(Net PPE) was $141.3 Mil.
Depreciation, Depletion and Amortization(DDA) was $66.9 Mil.
Selling, General & Admin. Expense(SGA) was $197.6 Mil.
Total Current Liabilities was $328.6 Mil.
Long-Term Debt was $0.0 Mil.
Net Income was 31.8 + 28.7 + 37.3 + 33.5 = $131.3 Mil.
Non Operating Income was 2.9 + 0.3 + 0.6 + 1.2 = $5.0 Mil.
Cash Flow from Operations was 71.4 + 11.4 + 52.4 + 73.5 = $208.7 Mil.
Accounts Receivable was $143.9 Mil.
Revenue was 202.1 + 189.8 + 196.4 + 193.1 = $781.4 Mil.
Gross Profit was 118.9 + 111.1 + 115.2 + 113.1 = $458.3 Mil.
Total Current Assets was $435.4 Mil.
Total Assets was $1,047.6 Mil.
Property, Plant and Equipment(Net PPE) was $122.6 Mil.
Depreciation, Depletion and Amortization(DDA) was $60.5 Mil.
Selling, General & Admin. Expense(SGA) was $211.6 Mil.
Total Current Liabilities was $305.0 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)
=(137.3 / 787.2) / (143.9 / 781.4)
=0.17441565 / 0.18415664
=0.9471

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)
=(458.3 / 781.4) / (447.5 / 787.2)
=0.58651139 / 0.56847053
=1.0317

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 + 141.3) / 1052) / (1 - (435.4 + 122.6) / 1047.6)
=0.47690114 / 0.46735395
=1.0204

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
=787.2 / 781.4
=1.0074

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))
=(60.5 / (60.5 + 122.6)) / (66.9 / (66.9 + 141.3))
=0.33042054 / 0.32132565
=1.0283

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)
=(197.6 / 787.2) / (211.6 / 781.4)
=0.25101626 / 0.27079601
=0.927

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 + 328.6) / 1052) / ((0 + 305) / 1047.6)
=0.31235741 / 0.29114166
=1.0729

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
=(131.3 - 5 - 208.7) / 1052
=-0.0783

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 -2.87 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 0.98810.96480.89310.96451.16170.89880.9680.94081.10040.9819
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

Mar14Jun14Sep14Dec14Mar15Jun15Sep15Dec15Mar16Jun16
DSRI 1.0471.13811.01671.100410.98830.94320.98191.0120.9471
GMI 1.08891.08881.06921.05231.0280.99290.99980.99931.01331.0317
AQI 1.04111.10681.12551.06941.00450.91190.91980.9481.01871.0204
SGI 1.06641.07221.08111.08851.08171.07841.05291.03781.02911.0074
DEPI 1.07261.03820.99230.95290.94240.93190.94710.9830.97611.0283
SGAI 0.90810.89650.9420.96020.95670.92630.89730.89220.8960.927
LVGI 1.05761.25731.19951.1121.16170.94990.93541.01731.0971.0729
TATA -0.0559-0.0918-0.0571-0.0596-0.0771-0.053-0.1164-0.1049-0.0835-0.0783
M-score -2.57-2.69-2.63-2.57-2.80-2.69-3.03-2.96-2.84-2.87
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