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The MGI Index

The MGI Index – ("Margin Growth Indicator" or "MGI") is a quantitative benchmark that seeks to identify companies that are the most and least efficient managers of growth and profitability. Companies with bloated corporate structures and inefficient business models tend to have low and often declining MGI scores, while those that are constantly trimming the corporate "fat" and increasing their efficiency tend to have high and often rising MGI scores.

The MGI Index aims to answer the following key questions:

  • Which management team is the most or least efficient?
  • How do various companies compare vs. their peers?
  • How well do the managers manage costs in both up and down cycles?
  • How much "fat" is there in the corporate infrastructure?
  • Is management taking concrete steps to improve efficiency?

MGI Index measures management’s effectiveness across key operating areas of the business. It provides a single, comprehensive view of the operating results benchmarked vis-a-vis the competition and the peer group. MGI uses up to eight years of publicly available financial information derived from SEC filings and management reports. MGI Index models a company’s performance and synthesizes short-term, mid-term and long-term operating results into an objective, uniform measure of corporate efficiency. MGI Index takes into account changes in key budget allocation areas such as research and development, sales, marketing, capital spending, general and administrative. MGI can measure companies that are profitable as well as those that are losing money. The result is a single number – the MGI Index, that is a measure of the fitness of the corporate operating model and is reflective not only of management intent but also of the actual performance.