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GuruFocus has detected 6 Warning Signs with BlackRock Inc $BLK.
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BlackRock Inc (NYSE:BLK)
Beneish M-Score
-2.26 (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.

BlackRock Inc has a M-score of -2.26 suggests that the company is not a manipulator.

BLK' s Beneish M-Score Range Over the Past 10 Years
Min: -13.14   Max: -0.69
Current: -2.26

-13.14
-0.69

During the past 13 years, the highest Beneish M-Score of BlackRock Inc was -0.69. The lowest was -13.14. And the median was -2.41.


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 BlackRock 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 * 1.2716+0.528 * 1.0037+0.404 * 0.995+0.892 * 1.0047+0.115 * 0.9833
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9836+4.679 * 0.0032-0.327 * 1.1545
=-2.26

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

This Year (Mar17) TTM:Last Year (Mar16) TTM:
Accounts Receivable was $3,227 Mil.
Revenue was 2824 + 2890 + 2837 + 2804 = $11,355 Mil.
Gross Profit was 2707 + 2781 + 2723 + 2695 = $10,906 Mil.
Total Current Assets was $9,041 Mil.
Total Assets was $230,586 Mil.
Property, Plant and Equipment(Net PPE) was $546 Mil.
Depreciation, Depletion and Amortization(DDA) was $231 Mil.
Selling, General & Admin. Expense(SGA) was $6,024 Mil.
Total Current Liabilities was $2,769 Mil.
Long-Term Debt was $5,619 Mil.
Net Income was 862 + 851 + 875 + 789 = $3,377 Mil.
Non Operating Income was 51 + 6 + 31 + 20 = $108 Mil.
Cash Flow from Operations was -191 + 1192 + 1060 + 467 = $2,528 Mil.
Accounts Receivable was $2,526 Mil.
Revenue was 2624 + 2863 + 2910 + 2905 = $11,302 Mil.
Gross Profit was 2527 + 2760 + 2808 + 2800 = $10,895 Mil.
Total Current Assets was $7,610 Mil.
Total Assets was $222,958 Mil.
Property, Plant and Equipment(Net PPE) was $581 Mil.
Depreciation, Depletion and Amortization(DDA) was $240 Mil.
Selling, General & Admin. Expense(SGA) was $6,096 Mil.
Total Current Liabilities was $2,057 Mil.
Long-Term Debt was $4,968 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)
=(3227 / 11355) / (2526 / 11302)
=0.28419199 / 0.22350027
=1.2716

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)
=(10895 / 11302) / (10906 / 11355)
=0.96398867 / 0.96045795
=1.0037

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 - (9041 + 546) / 230586) / (1 - (7610 + 581) / 222958)
=0.95842332 / 0.96326214
=0.995

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
=11355 / 11302
=1.0047

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))
=(240 / (240 + 581)) / (231 / (231 + 546))
=0.29232643 / 0.2972973
=0.9833

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)
=(6024 / 11355) / (6096 / 11302)
=0.53051519 / 0.53937356
=0.9836

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)
=((5619 + 2769) / 230586) / ((4968 + 2057) / 222958)
=0.03637688 / 0.03150818
=1.1545

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
=(3377 - 108 - 2528) / 230586
=0.0032

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.

BlackRock Inc has a M-score of -2.26 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.

BlackRock Inc Annual Data

Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15Dec16
DSRI 0.5550.69742.05440.66550.88721.11650.9160.86681.02561.0737
GMI 1.01271.11851.19170.85860.90120.99630.99550.99811.00311.0027
AQI 0.97790.96711.16521.00550.99990.99591.00540.99740.99550.9989
SGI 2.30931.04520.92811.83231.05451.02821.09031.08851.02890.9784
DEPI 0.58770.90711.35770.83431.17451.0330.97090.95571.25091.0265
SGAI 0.88720.88430.81311.17641.17710.98391.00830.96230.99160.988
LVGI 1.27570.91510.36320.85561.18411.11420.85661.01390.75671.0128
TATA -0.0043-0.0281-0.0032-0.0032-0.00290.0005-0.00460.00030.0010.0044
M-score -1.86-2.76-1.14-2.13-2.67-2.38-2.46-2.53-2.32-2.41

BlackRock Inc Quarterly Data

Mar15Jun15Sep15Dec15Mar16Jun16Sep16Dec16Mar17Jun17
DSRI 0.92370.52990.9451.02560.87751.23581.0411.07371.2716
GMI 0.99981.0021.00361.00311.00251.00211.00261.00271.0037
AQI 1.00421.01131.00260.99550.99590.99381.00110.99890.995
SGI 1.07051.05271.02241.02891.01510.99470.98290.97841.0047
DEPI 1.09641.14431.18721.25091.13891.12431.14341.02650.9833
SGAI 0.97120.98450.9820.99160.99021.00551.0090.9880.9836
LVGI 0.96240.56250.66240.75670.67681.10510.97281.01281.1545
TATA 0.00180.00110.00060.0010.00080.0030.00420.00440.0032
M-score -2.45-2.69-2.37-2.32-2.45-2.28-2.41-2.41-2.26
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