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Morgan Stanley (NYSE:MS)
Beneish M-Score
-2.77 (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.

Morgan Stanley has a M-score of -2.77 suggests that the company is not a manipulator.

MS' s Beneish M-Score Range Over the Past 10 Years
Min: -3.54   Max: 1.02
Current: -2.77

-3.54
1.02

During the past 13 years, the highest Beneish M-Score of Morgan Stanley was 1.02. The lowest was -3.54. And the median was -2.39.


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 Morgan Stanley 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 * 1.0431+0.528 * 1+0.404 * 1.0075+0.892 * 0.8867+0.115 * 0.1629
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9433+4.679 * -0.0287-0.327 * 1.0303
=-2.77

* 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 $52,827 Mil.
Revenue was 8909 + 7792 + 7738 + 7767 = $32,206 Mil.
Gross Profit was 8909 + 7792 + 7738 + 7767 = $32,206 Mil.
Total Current Assets was $0 Mil.
Total Assets was $828,873 Mil.
Property, Plant and Equipment(Net PPE) was $0 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,658 Mil.
Selling, General & Admin. Expense(SGA) was $17,210 Mil.
Total Current Liabilities was $0 Mil.
Long-Term Debt was $163,492 Mil.
Net Income was 1582 + 1134 + 908 + 1018 = $4,642 Mil.
Non Operating Income was 0 + 0 + 0 + 0 = $0 Mil.
Cash Flow from Operations was 12128 + 4138 + 11637 + 490 = $28,393 Mil.
Accounts Receivable was $57,115 Mil.
Revenue was 9743 + 9907 + 7764 + 8907 = $36,321 Mil.
Gross Profit was 9743 + 9907 + 7764 + 8907 = $36,321 Mil.
Total Current Assets was $0 Mil.
Total Assets was $825,755 Mil.
Property, Plant and Equipment(Net PPE) was $6,182 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,203 Mil.
Selling, General & Admin. Expense(SGA) was $20,575 Mil.
Total Current Liabilities was $0 Mil.
Long-Term Debt was $158,089 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)
=(52827 / 32206) / (57115 / 36321)
=1.64028442 / 1.57250626
=1.0431

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)
=(36321 / 36321) / (32206 / 32206)
=1 / 1
=1

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 - (0 + 0) / 828873) / (1 - (0 + 6182) / 825755)
=1 / 0.99251352
=1.0075

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
=32206 / 36321
=0.8867

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))
=(1203 / (1203 + 6182)) / (1658 / (1658 + 0))
=0.16289777 / 1
=0.1629

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)
=(17210 / 32206) / (20575 / 36321)
=0.53437248 / 0.56647669
=0.9433

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)
=((163492 + 0) / 828873) / ((158089 + 0) / 825755)
=0.19724614 / 0.19144783
=1.0303

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
=(4642 - 0 - 28393) / 828873
=-0.0287

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.

Morgan Stanley has a M-score of -2.77 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.

Morgan Stanley Annual Data

Nov06Nov07Nov08Dec09Dec10Dec11Dec12Dec13Dec14Dec15
DSRI 1.37531.56340.66552.46050.99920.85692.01770.71560.81280.9042
GMI 1111111111
AQI 0.99940.99950.99650.99851.00160.9991.0011.00040.99960.9995
SGI 1.07890.93920.88270.94721.33271.03190.81231.24121.05481.0257
DEPI 1.30111.80150.72220.91920.78791.04910.85031.04671.25640.87
SGAI 1.08691.26380.85351.31590.8321.00361.19170.83031.02080.8949
LVGI 0.86711.41021.36051.05270.96191.08790.86810.84921.02081.0078
TATA 0.06090.0244-0.10880.0613-0.0445-0.015-0.0316-0.03850.0030.0031
M-score -1.72-1.99-3.53-0.98-2.37-2.68-1.87-2.62-2.57-2.53

Morgan Stanley Quarterly Data

Mar14Jun14Sep14Dec14Mar15Jun15Sep15Dec15Mar16Jun16
DSRI 0.79930.7340.87550.81210.88770.96280.89160.90420.84021.0431
GMI 1111111111
AQI 1.00051.00031.00030.99960.99950.99970.99940.99951.00751.0075
SGI 1.21561.15281.08541.05571.05631.08731.0241.02570.9390.8867
DEPI 1.02641.04721.12611.25641.28511.18030.92360.870.15840.1629
SGAI 0.86280.88880.95851.021.02581.00641.01730.89490.92380.9433
LVGI 0.92450.94250.93981.02080.8620.90460.95251.00781.07471.0303
TATA -0.0383-0.0218-0.02540.0030.02550.02110.02180.0031-0.0198-0.0287
M-score -2.60-2.65-2.60-2.57-2.34-2.29-2.45-2.53-2.88-2.77
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