Switch to:
GuruFocus has detected 4 Warning Signs with Morgan Stanley $MS.
More than 500,000 people have already joined GuruFocus to track the stocks they follow and exchange investment ideas.
Morgan Stanley (NYSE:MS)
Beneish M-Score
-2.36 (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 -2.35 suggests that the company is not a manipulator.

MS' s Beneish M-Score Range Over the Past 10 Years
Min: -3.54   Max: 3.63
Current: -2.36

-3.54
3.63

During the past 13 years, the highest Beneish M-Score of Morgan Stanley was 3.63. The lowest was -3.54. 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 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 * 0.9754+0.528 * 1+0.404 * 1+0.892 * 1.1073+0.115 * 1
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9743+4.679 * 0.0122-0.327 * 1.029
=-2.35

* 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 $48,344 Mil.
Revenue was 9745 + 9021 + 8909 + 8909 = $36,584 Mil.
Gross Profit was 9745 + 9021 + 8909 + 8909 = $36,584 Mil.
Total Current Assets was $0 Mil.
Total Assets was $832,391 Mil.
Property, Plant and Equipment(Net PPE) was $0 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,755 Mil.
Selling, General & Admin. Expense(SGA) was $19,023 Mil.
Total Current Liabilities was $0 Mil.
Long-Term Debt was $172,688 Mil.
Net Income was 1930 + 1666 + 1597 + 1582 = $6,775 Mil.
Non Operating Income was 0 + 0 + 0 + 0 = $0 Mil.
Cash Flow from Operations was -1611 + -5367 + -8452 + 12089 = $-3,341 Mil.
Accounts Receivable was $44,762 Mil.
Revenue was 7792 + 7738 + 7767 + 9743 = $33,040 Mil.
Gross Profit was 7792 + 7738 + 7767 + 9743 = $33,040 Mil.
Total Current Assets was $0 Mil.
Total Assets was $807,497 Mil.
Property, Plant and Equipment(Net PPE) was $0 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,527 Mil.
Selling, General & Admin. Expense(SGA) was $17,634 Mil.
Total Current Liabilities was $0 Mil.
Long-Term Debt was $162,804 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)
=(48344 / 36584) / (44762 / 33040)
=1.321452 / 1.35478208
=0.9754

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)
=(33040 / 33040) / (36584 / 36584)
=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) / 832391) / (1 - (0 + 0) / 807497)
=1 / 1
=1

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
=36584 / 33040
=1.1073

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))
=(1527 / (1527 + 0)) / (1755 / (1755 + 0))
=1 / 1
=1

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)
=(19023 / 36584) / (17634 / 33040)
=0.51998141 / 0.53371671
=0.9743

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)
=((172688 + 0) / 832391) / ((162804 + 0) / 807497)
=0.2074602 / 0.20161561
=1.029

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
=(6775 - 0 - -3341) / 832391
=0.0122

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 -2.35 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.

Morgan Stanley Annual Data

Nov07Nov08Dec09Dec10Dec11Dec12Dec13Dec14Dec15Dec16
DSRI 1.63150.6942.46390.99770.85692.01770.71620.81210.90421.0387
GMI 1111111111
AQI 0.99950.99650.99851.00160.9991.0011.00040.99961.00771
SGI 0.90.84640.9461.33461.03190.81231.24021.05571.02570.9851
DEPI 1.80150.72220.91920.78791.04910.85031.04671.25640.15971
SGAI 1.2840.87211.31810.83061.02561.16620.8311.020.89491.0035
LVGI 1.41021.36051.05270.96191.08790.86810.84921.02081.00781.0412
TATA 0.0244-0.10880.0613-0.0445-0.015-0.0316-0.03850.0030.00310.0043
M-score -1.97-3.54-0.98-2.37-2.68-1.86-2.62-2.57-2.61-2.45

Morgan Stanley Quarterly Data

Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16Dec16Mar17
DSRI 0.81210.88770.96280.89160.90420.84021.04311.08321.03870.9754
GMI 1111111111
AQI 0.99960.99950.99970.99941.00771.00751.00751.007611
SGI 1.05571.05631.08731.0241.02570.9390.88670.94790.98511.1073
DEPI 1.25641.28511.18030.92360.15970.15840.16290.186611
SGAI 1.021.02581.00641.01730.89490.92380.94330.94891.00350.9743
LVGI 1.02080.8620.90460.95251.00781.07471.03031.04781.04121.029
TATA 0.0030.02550.02110.02180.0031-0.0199-0.0287-0.01750.00430.0122
M-score -2.57-2.34-2.29-2.45-2.61-2.88-2.77-2.63-2.45-2.35
Get WordPress Plugins for easy affiliate links on Stock Tickers and Guru Names | Earn affiliate commissions by embedding GuruFocus Charts
GuruFocus Affiliate Program: Earn up to $400 per referral. ( Learn More)

GF Chat

{{numOfNotice}}
FEEDBACK