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Morningstar (Morningstar) Beneish M-Score

: -2.61 (As of Today)
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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 -2.61 no higher than -1.78, which implies that the company is unlikely to be a manipulator.

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

MORN' s Beneish M-Score Range Over the Past 10 Years
Min: -2.98   Med: -2.82   Max: -2.34
Current: -2.61

During the past 13 years, the highest Beneish M-Score of Morningstar was -2.34. The lowest was -2.98. And the median was -2.82.


Morningstar Beneish M-Score Historical Data

The historical data trend for Morningstar's Beneish M-Score can be seen below:

* 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.

* Premium members only.

Morningstar Annual Data
Trend Dec14 Dec15 Dec16 Dec17 Dec18 Dec19 Dec20 Dec21 Dec22 Dec23
Beneish M-Score
Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only -2.82 -2.83 -2.63 -2.76 -2.61

Morningstar Quarterly Data
Mar19 Jun19 Sep19 Dec19 Mar20 Jun20 Sep20 Dec20 Mar21 Jun21 Sep21 Dec21 Mar22 Jun22 Sep22 Dec22 Mar23 Jun23 Sep23 Dec23
Beneish M-Score Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only -2.76 -2.80 -2.76 -2.74 -2.61

Competitive Comparison

For the Financial Data & Stock Exchanges subindustry, Morningstar's Beneish M-Score, along with its competitors' market caps and Beneish M-Score data, can be viewed below:

* Competitive companies are chosen from companies within the same industry, with headquarter located in same country, with closest market capitalization; x-axis shows the market cap, and y-axis shows the term value; the bigger the dot, the larger the market cap. Note that "N/A" values will not show up in the chart.


Morningstar Beneish M-Score Distribution

For the Capital Markets industry and Financial Services sector, Morningstar's Beneish M-Score distribution charts can be found below:

* The bar in red indicates where Morningstar's Beneish M-Score falls into.



Morningstar 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 Morningstar 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 * 1.0267+0.528 * 0.9952+0.404 * 0.9954+0.892 * 1.0898+0.115 * 0.8992
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9451+4.679 * -0.052271-0.327 * 0.9425
=-2.61

* 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 (Dec23) TTM:Last Year (Dec22) TTM:
Total Receivables was $345 Mil.
Revenue was 538.7 + 515.5 + 504.7 + 479.7 = $2,039 Mil.
Gross Profit was 333.3 + 312.6 + 288.3 + 260.9 = $1,195 Mil.
Total Current Assets was $816 Mil.
Total Assets was $3,403 Mil.
Property, Plant and Equipment(Net PPE) was $372 Mil.
Depreciation, Depletion and Amortization(DDA) was $185 Mil.
Selling, General, & Admin. Expense(SGA) was $780 Mil.
Total Current Liabilities was $881 Mil.
Long-Term Debt & Capital Lease Obligation was $1,092 Mil.
Net Income was 73.5 + 39.1 + 36.1 + -7.6 = $141 Mil.
Non Operating Income was 7.4 + 0.2 + 4.1 + -9.1 = $3 Mil.
Cash Flow from Operations was 137.8 + 130.7 + 24.5 + 23.4 = $316 Mil.
Total Receivables was $308 Mil.
Revenue was 475 + 468.2 + 470.4 + 457 = $1,871 Mil.
Gross Profit was 280 + 272.8 + 272.8 + 265.7 = $1,091 Mil.
Total Current Assets was $811 Mil.
Total Assets was $3,475 Mil.
Property, Plant and Equipment(Net PPE) was $391 Mil.
Depreciation, Depletion and Amortization(DDA) was $167 Mil.
Selling, General, & Admin. Expense(SGA) was $757 Mil.
Total Current Liabilities was $883 Mil.
Long-Term Debt & Capital Lease Obligation was $1,254 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)
=(344.5 / 2038.6) / (307.9 / 1870.6)
=0.168989 / 0.1646
=1.0267

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)
=(1091.3 / 1870.6) / (1195.1 / 2038.6)
=0.583396 / 0.586236
=0.9952

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 - (815.7 + 371.6) / 3403.4) / (1 - (810.8 + 391) / 3474.8)
=0.651143 / 0.654138
=0.9954

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
=2038.6 / 1870.6
=1.0898

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))
=(166.6 / (166.6 + 391)) / (184.9 / (184.9 + 371.6))
=0.29878 / 0.332255
=0.8992

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)
=(779.6 / 2038.6) / (756.9 / 1870.6)
=0.382419 / 0.40463
=0.9451

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)
=((1091.7 + 880.8) / 3403.4) / ((1254.2 + 882.5) / 3474.8)
=0.579567 / 0.614913
=0.9425

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
=(141.1 - 2.6 - 316.4) / 3403.4
=-0.052271

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.

Morningstar has a M-score of -2.61 suggests that the company is unlikely to be a manipulator.


Morningstar Beneish M-Score Related Terms

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Morningstar (Morningstar) Business Description

Traded in Other Exchanges
Address
22 West Washington Street, Chicago, IL, USA, 60602
Morningstar Inc is a provider of independent investment research to financial advisers, asset managers, and investors. The company focuses its operations on two core sectors: data and research. It offers data on investments such as mutual funds, stocks, exchange-traded funds, closed-end funds, separate accounts, and variable annuities. Further, the company tracks real-time market data of equity, derivative, and currency exchanges and other investments. In its research operation, Morningstar offers analyst research on passive and active mutual funds, alternative funds, and college saving plans. Morningstar's largest share of revenue is generated in the United States of America.
Executives
Joseph D Mansueto director, 10 percent owner, officer: Executive Chairman C/O MORNINGSTAR, INC., 225 WEST WACKER DRIVE, CHICAGO IL 60606
Robin Diamonte director C/O MORNINGSTAR, INC., 22 WEST WASHINGTON ST., CHICAGO IL 60602
Gail S Landis director MORNINGSTAR, INC., 22 WEST WASHINGTON STREET, CHICAGO IL 60602
Daniel Joseph Dunn officer: Chief Revenue Officer C/O MORNINGSTAR, INC., 22 WEST WASHINGTON STREET, CHICAGO IL 60602
Caroline J Tsay director C/O ROSETTA STONE INC., 1919 NORTH LYNN STREET, 7TH FLOOR, ARLINGTON VA 22209
Bevin Desmond officer: Head of Talent and Culture C/O MORNINGSTAR, INC., 225 WEST WACKER DRIVE, CHICAGO IL 60606
William M Lyons director 225 WEST WACKER DRIVE, CHICAGO IL 60606
Cheryl A Francis director 8237 GREYSTONE COURT, BURR RIDGE IL 60527
Doniel Sutton director C/O MORNINGSTAR, INC., 22 WEST WASHINGTON STREET, CHICAGO IL 60602
Steven N Kaplan director 1101 EAST 58TH STREET, CHICAGO IL 60637
Stephen Joynt director C/O MORNINGSTAR, INC., 22 W. WASHINGTON STREET, CHICAGO IL 60602
Kimberly J Mcgarry officer: Global Controller & CAO 22 WEST WASHINGTON STREET, 6TH FLOOR, CHICAGO IL 60602
Jason Dubinsky officer: Chief Financial Officer C/O MORNINGSTAR, INC., 22 W. WASHINGTON STREET, CHICAGO IL 60602
Kunal Kapoor director, officer: CEO MORNINGSTAR, INC., 22 WEST WASHINGTON STREET, CHICAGO IL 60602
Jack Noonan director 17000 GULF BLVD, UNIT B, N. REDINGTON BEACH FL 33708