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Morgan Stanley (MEX:MS) Beneish M-Score

: -2.55 (As of Today)
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Note: Financial institutions were excluded from the sample in Beneish paper when calculating Beneish M-Score. Thus, the prediction might not fit banks and insurance companies.

The zones of discrimination for M-Score is as such:

An M-Score of equal or less than -1.78 suggests that the company is unlikely to be a manipulator.
An M-Score of greater than -1.78 signals that the company is likely to be a manipulator.

Good Sign:

Beneish M-Score -2.55 no higher than -1.78, which implies that the company is unlikely to be a manipulator.

The historical rank and industry rank for Morgan Stanley's Beneish M-Score or its related term are showing as below:

MEX:MS' s Beneish M-Score Range Over the Past 10 Years
Min: -3.7   Med: -2.48   Max: -0.02
Current: -2.55

During the past 13 years, the highest Beneish M-Score of Morgan Stanley was -0.02. The lowest was -3.70. And the median was -2.48.


Morgan Stanley Beneish M-Score Calculation

The M-score was created by Professor Messod Beneish. Instead of measuring the bankruptcy risk (Altman Z-Score) or business trend (Piotroski 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 * 0.877+0.528 * 1+0.404 * 1.1026+0.892 * 0.8742+0.115 * 0.9971
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0687+4.679 * 0.01489-0.327 * 0.9864
=-2.60

* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD.
* For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.

This Year (Dec22) TTM:Last Year (Dec21) TTM:
Total Receivables was MXN1,540,546 Mil.
Revenue was 233376.89 + 243616.377 + 245203.766 + 285957.504 = MXN1,008,155 Mil.
Gross Profit was 233376.89 + 243616.377 + 245203.766 + 285957.504 = MXN1,008,155 Mil.
Total Current Assets was MXN3,762,040 Mil.
Total Assets was MXN23,149,995 Mil.
Property, Plant and Equipment(Net PPE) was MXN78 Mil.
Depreciation, Depletion and Amortization(DDA) was MXN80,081 Mil.
Selling, General, & Admin. Expense(SGA) was MXN479,845 Mil.
Total Current Liabilities was MXN4,340,147 Mil.
Long-Term Debt & Capital Lease Obligation was MXN4,728,756 Mil.
Net Income was 43858.693 + 52821.345 + 49925.2 + 75315.77 = MXN221,921 Mil.
Non Operating Income was 0 + 0 + 0 + 0 = MXN0 Mil.
Cash Flow from Operations was -274528.741 + -151580.402 + 298410.622 + 4910.112 = MXN-122,788 Mil.
Total Receivables was MXN2,009,273 Mil.
Revenue was 286958.238 + 279202.081 + 279718.469 + 307286.75 = MXN1,153,166 Mil.
Gross Profit was 286958.238 + 279202.081 + 279718.469 + 307286.75 = MXN1,153,166 Mil.
Total Current Assets was MXN5,978,265 Mil.
Total Assets was MXN24,863,018 Mil.
Property, Plant and Equipment(Net PPE) was MXN335 Mil.
Depreciation, Depletion and Amortization(DDA) was MXN86,212 Mil.
Selling, General, & Admin. Expense(SGA) was MXN513,565 Mil.
Total Current Liabilities was MXN5,001,774 Mil.
Long-Term Debt & Capital Lease Obligation was MXN4,872,222 Mil.




1. DSRI = Days Sales in Receivables Index

Measured as the ratio of Revenue in Total 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)
=(1540546.393 / 1008154.537) / (2009272.666 / 1153165.538)
=1.528086 / 1.742397
=0.877

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)
=(1153165.538 / 1153165.538) / (1008154.537 / 1008154.537)
=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 Property, Plant and Equipment to Total Assets.

AQI=(1 - (CurrentAssets_t + PPE_t) / TotalAssets_t) / (1 - (CurrentAssets_t-1 + PPE_t-1) / TotalAssets_t-1)
=(1 - (3762040.182 + 78.459) / 23149995.027) / (1 - (5978265.231 + 334.816) / 24863017.619)
=0.837489 / 0.759538
=1.1026

4. SGI = Sales Growth Index

Ratio of Revenue 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
=1008154.537 / 1153165.538
=0.8742

5. DEPI = Depreciation Index

Measured as the ratio of the rate of Depreciation, Depletion and Amortization 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))
=(86211.615 / (86211.615 + 334.816)) / (80081.13 / (80081.13 + 78.459))
=0.996131 / 0.999021
=0.9971

Note: If the Depreciation, Depletion and Amortization data is not available, we assume that the depreciation rate is constant and set the Depreciation Index to 1.

6. SGAI = Sales, General and Administrative expenses Index

The ratio of Selling, General, & Admin. Expense(SGA) to Sales 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)
=(479844.548 / 1008154.537) / (513565.499 / 1153165.538)
=0.475963 / 0.445353
=1.0687

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 in leverage

LVGI=((LTD_t + CurrentLiabilities_t) / TotalAssets_t) / ((LTD_t-1 + CurrentLiabilities_t-1) / TotalAssets_t-1)
=((4728755.6 + 4340147.183) / 23149995.027) / ((4872221.502 + 5001774.368) / 24863017.619)
=0.391745 / 0.397136
=0.9864

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
=(221921.008 - 0 - -122788.409) / 23149995.027
=0.01489

An M-Score of equal or less than -1.78 suggests that the company is unlikely to be a manipulator. An M-Score of greater than -1.78 signals that the company is likely to be a manipulator.

Morgan Stanley has a M-score of -2.60 suggests that the company is unlikely to be a manipulator.


Morgan Stanley Beneish M-Score Related Terms

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Morgan Stanley (MEX:MS) Business Description

Morgan Stanley logo
Address
1585 Broadway, New York, NY, USA, 10036
Morgan Stanley is a global investment bank whose history, through its legacy firms, can be traced back to 1924. The company has institutional securities, wealth management, and investment management segments. The company had about $5 trillion of client assets as well as over 70,000 employees at the end of 2021. Approximately 50% of the company's net revenue is from its institutional securities business, with the remainder coming from wealth and investment management. The company derives about 30% of its total revenue outside the Americas.