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GuruFocus has detected 5 Warning Signs with Northern Trust Corp $NTRS.
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Northern Trust Corp (NAS:NTRS)
Beneish M-Score
-2.68 (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.

Northern Trust Corp has a M-score of -2.68 suggests that the company is not a manipulator.

NTRS' s Beneish M-Score Range Over the Past 10 Years
Min: -4.39   Max: 6.37
Current: -2.68

-4.39
6.37

During the past 13 years, the highest Beneish M-Score of Northern Trust Corp was 6.37. The lowest was -4.39. And the median was -2.46.


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 Northern Trust Corp 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 * 0.7705+0.528 * 1+0.404 * 0.9999+0.892 * 1.064+0.115 * 0.9813
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9995+4.679 * -0.0126-0.327 * 0.9674
=-2.68

* 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 $1,560 Mil.
Revenue was 1286.4 + 1241.4 + 1213.7 + 1316.7 = $5,058 Mil.
Gross Profit was 1286.4 + 1241.4 + 1213.7 + 1316.7 = $5,058 Mil.
Total Current Assets was $0 Mil.
Total Assets was $121,489 Mil.
Property, Plant and Equipment(Net PPE) was $460 Mil.
Depreciation, Depletion and Amortization(DDA) was $384 Mil.
Selling, General & Admin. Expense(SGA) was $2,510 Mil.
Total Current Liabilities was $0 Mil.
Long-Term Debt was $7,173 Mil.
Net Income was 276.1 + 266.5 + 257.6 + 260.7 = $1,061 Mil.
Non Operating Income was 0 + 0 + 0 + 0 = $0 Mil.
Cash Flow from Operations was 784.7 + 838.5 + 1184.6 + -217.6 = $2,590 Mil.
Accounts Receivable was $1,903 Mil.
Revenue was 1186 + 1156.7 + 1155.5 + 1255.9 = $4,754 Mil.
Gross Profit was 1186 + 1156.7 + 1155.5 + 1255.9 = $4,754 Mil.
Total Current Assets was $0 Mil.
Total Assets was $117,799 Mil.
Property, Plant and Equipment(Net PPE) was $438 Mil.
Depreciation, Depletion and Amortization(DDA) was $354 Mil.
Selling, General & Admin. Expense(SGA) was $2,360 Mil.
Total Current Liabilities was $0 Mil.
Long-Term Debt was $7,189 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)
=(1559.9 / 5058.2) / (1902.7 / 4754.1)
=0.30839034 / 0.40022297
=0.7705

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)
=(4754.1 / 4754.1) / (5058.2 / 5058.2)
=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 + 459.9) / 121488.7) / (1 - (0 + 437.8) / 117798.8)
=0.99621446 / 0.99628349
=0.9999

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
=5058.2 / 4754.1
=1.064

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))
=(353.5 / (353.5 + 437.8)) / (384.3 / (384.3 + 459.9))
=0.44673322 / 0.45522388
=0.9813

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)
=(2509.8 / 5058.2) / (2360.1 / 4754.1)
=0.49618441 / 0.49643466
=0.9995

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)
=((7173.1 + 0) / 121488.7) / ((7189.4 + 0) / 117798.8)
=0.05904335 / 0.06103118
=0.9674

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
=(1060.9 - 0 - 2590.2) / 121488.7
=-0.0126

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.

Northern Trust Corp has a M-score of -2.68 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.

Northern Trust Corp Annual Data

Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15Dec16
DSRI 1.4171.03311.2660.9161.14022.39920.63011.0931.26630.459
GMI 1111111111
AQI 1.00081.00110.99961.00061.00111.00011.00031.00041.00021.0001
SGI 1.17121.21930.88510.96320.97331.09741.04961.05921.08571.0543
DEPI 0.8770.27480.97930.93560.94810.90960.93630.95210.97740.9907
SGAI 1.28770.8241.11761.04111.12321.06291.26750.93390.94971.0017
LVGI 1.07081.05431.00841.02920.93320.46492.12190.85741.33641.0746
TATA -0.0023-0.0007-0.0018-0.0014-0.0068-0.0013-0.001-0.0011-0.0074-0.0039
M-score -2.04-2.33-2.37-2.62-2.41-0.96-3.20-2.29-2.30-2.97

Northern Trust Corp Quarterly Data

Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16Dec16Mar17
DSRI 1.0931.12891.16761.13231.26630.7981.04110.99260.4590.7705
GMI 1111111111
AQI 1.00041.00021.00051.00041.00021.00041.00010.99991.00010.9999
SGI 1.05921.06541.09131.10121.08571.07431.04691.04221.05431.064
DEPI 0.95210.9660.96910.96340.97740.97370.98090.98490.99070.9813
SGAI 0.93390.99860.85730.81660.94970.89480.97630.96541.00170.9995
LVGI 0.85741.26051.59141.30881.33641.07941.41040.98931.07460.9674
TATA -0.0011-0.00030.00020.0069-0.0074-0.00050.0098-0.0085-0.0039-0.0126
M-score -2.29-2.39-2.42-2.31-2.30-2.61-2.49-2.48-2.97-2.68
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