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GuruFocus has detected 3 Warning Signs with Magellan Midstream Partners LP $MMP.
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Magellan Midstream Partners LP (NYSE:MMP)
Beneish M-Score
-2.60 (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.

Magellan Midstream Partners LP has a M-score of -2.60 suggests that the company is not a manipulator.

MMP' s Beneish M-Score Range Over the Past 10 Years
Min: -3.77   Max: 7.94
Current: -2.6

-3.77
7.94

During the past 13 years, the highest Beneish M-Score of Magellan Midstream Partners LP was 7.94. The lowest was -3.77. And the median was -2.38.


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 Magellan Midstream Partners LP 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 * 0.8559+0.528 * 1.0465+0.404 * 1.134+0.892 * 1.0687+0.115 * 1.0135
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.8802+4.679 * -0.0304-0.327 * 1.0177
=-2.60

* 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 $82 Mil.
Revenue was 642.074 + 614.915 + 551.782 + 518.897 = $2,328 Mil.
Gross Profit was 337.606 + 312.029 + 298.254 + 289.032 = $1,237 Mil.
Total Current Assets was $302 Mil.
Total Assets was $6,830 Mil.
Property, Plant and Equipment(Net PPE) was $5,360 Mil.
Depreciation, Depletion and Amortization(DDA) was $182 Mil.
Selling, General & Admin. Expense(SGA) was $147 Mil.
Total Current Liabilities was $398 Mil.
Long-Term Debt was $4,203 Mil.
Net Income was 222.736 + 213.291 + 194.551 + 187.859 = $818 Mil.
Non Operating Income was -1.17 + 0.684 + 3.324 + 3.169 = $6 Mil.
Cash Flow from Operations was 265.328 + 325.045 + 231.927 + 197.5 = $1,020 Mil.
Accounts Receivable was $90 Mil.
Revenue was 519.816 + 573.048 + 586.675 + 498.428 = $2,178 Mil.
Gross Profit was 283.318 + 312.455 + 353.804 + 261.603 = $1,211 Mil.
Total Current Assets was $516 Mil.
Total Assets was $6,392 Mil.
Property, Plant and Equipment(Net PPE) was $4,914 Mil.
Depreciation, Depletion and Amortization(DDA) was $169 Mil.
Selling, General & Admin. Expense(SGA) was $157 Mil.
Total Current Liabilities was $679 Mil.
Long-Term Debt was $3,552 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)
=(82.021 / 2327.668) / (89.662 / 2177.967)
=0.03523741 / 0.04116775
=0.8559

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)
=(1211.18 / 2177.967) / (1236.921 / 2327.668)
=0.55610576 / 0.53139924
=1.0465

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 - (302.428 + 5360.372) / 6829.879) / (1 - (515.531 + 4913.509) / 6392.314)
=0.17087843 / 0.15069253
=1.134

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
=2327.668 / 2177.967
=1.0687

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))
=(168.869 / (168.869 + 4913.509)) / (181.686 / (181.686 + 5360.372))
=0.03322638 / 0.03278313
=1.0135

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)
=(147.222 / 2327.668) / (156.507 / 2177.967)
=0.06324871 / 0.07185922
=0.8802

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)
=((4203.08 + 397.599) / 6829.879) / ((3552.032 + 679.094) / 6392.314)
=0.67361062 / 0.66190835
=1.0177

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
=(818.437 - 6.007 - 1019.8) / 6829.879
=-0.0304

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.

Magellan Midstream Partners LP has a M-score of -2.60 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.

Magellan Midstream Partners LP Annual Data

Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15Dec16
DSRI 1.120.6472.3270.82260.7971.23731.02290.59931.07121.2501
GMI 0.92780.78090.89771.20560.92550.94830.8880.93270.9651.0356
AQI 0.96320.73520.70042.24831.08741.2721.82961.32771.04561.137
SGI 1.0780.91980.83591.53571.12281.01341.09911.21180.92721.0077
DEPI 0.82831.17891.03471.03320.91961.00911.01650.97311.07651.0243
SGAI 1.03471.04841.39290.73850.9221.09411.10190.92351.10070.968
LVGI 1.01730.91371.22290.97191.03781.03521.01150.99881.01441.0445
TATA -0.1138-0.1237-0.0692-0.0301-0.0403-0.0473-0.0396-0.048-0.0416-0.0291
M-score -2.92-3.64-2.04-1.64-2.76-2.42-2.30-2.78-2.69-2.31

Magellan Midstream Partners LP Quarterly Data

Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16Dec16Mar17
DSRI 0.59930.89660.88831.0341.07120.96731.13961.19881.25010.8559
GMI 0.93270.98390.97160.98540.9650.95390.940.98551.03561.0465
AQI 1.32771.12070.91870.89971.04561.04291.07261.00921.1371.134
SGI 1.21181.06471.04011.03310.92720.95860.96680.92491.00771.0687
DEPI 0.97310.97261.12571.13461.07651.09381.02731.02371.02431.0135
SGAI 0.92351.01770.98870.99231.10071.09691.07381.09250.9680.8802
LVGI 0.99881.00321.01831.01561.01441.02981.02751.05831.04451.0177
TATA -0.048-0.0436-0.0414-0.0435-0.0416-0.0431-0.0365-0.0317-0.0291-0.0304
M-score -2.78-2.69-2.78-2.66-2.69-2.77-2.57-2.55-2.31-2.60
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