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Aetna Inc (NYSE:AET)
Beneish M-Score
-2.38 (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.

Aetna Inc has a M-score of -2.38 suggests that the company is not a manipulator.

AET' s Beneish M-Score Range Over the Past 10 Years
Min: -3.51   Max: 0.31
Current: -2.38

-3.51
0.31

During the past 13 years, the highest Beneish M-Score of Aetna Inc was 0.31. The lowest was -3.51. And the median was -2.64.


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 Aetna Inc 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 * 1.2202+0.528 * 0.9584+0.404 * 0.9821+0.892 * 1.0646+0.115 * 0.9475
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0533+4.679 * -0.0235-0.327 * 1.0248
=-2.38

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.

This Year (Sep15) TTM:Last Year (Sep14) TTM:
Accounts Receivable was $4,457 Mil.
Revenue was 14953 + 15240.9 + 15094.1 + 14771.2 = $60,059 Mil.
Gross Profit was 4014.7 + 4205.4 + 4325.5 + 3731 = $16,277 Mil.
Total Current Assets was $12,347 Mil.
Total Assets was $53,478 Mil.
Property, Plant and Equipment(Net PPE) was $629 Mil.
Depreciation, Depletion and Amortization(DDA) was $660 Mil.
Selling, General & Admin. Expense(SGA) was $11,520 Mil.
Total Current Liabilities was $15,152 Mil.
Long-Term Debt was $7,834 Mil.
Net Income was 560.1 + 731.8 + 777.5 + 232 = $2,301 Mil.
Non Operating Income was -65.1 + -63.7 + -63.2 + 700.1 = $508 Mil.
Cash Flow from Operations was 1026.5 + 255.7 + 1473.4 + 294.1 = $3,050 Mil.
Accounts Receivable was $3,431 Mil.
Revenue was 14727.8 + 14509.4 + 13994.8 + 13182.7 = $56,415 Mil.
Gross Profit was 3851.7 + 3669 + 3839.8 + 3293.1 = $14,654 Mil.
Total Current Assets was $11,465 Mil.
Total Assets was $53,026 Mil.
Property, Plant and Equipment(Net PPE) was $669 Mil.
Depreciation, Depletion and Amortization(DDA) was $630 Mil.
Selling, General & Admin. Expense(SGA) was $10,274 Mil.
Total Current Liabilities was $14,633 Mil.
Long-Term Debt was $7,606 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)
=(4457 / 60059.2) / (3431 / 56414.7)
=0.07421011 / 0.06081748
=1.2202

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)
=(4205.4 / 56414.7) / (4014.7 / 60059.2)
=0.2597479 / 0.27100927
=0.9584

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 - (12347.3 + 629.3) / 53478.4) / (1 - (11464.9 + 668.9) / 53025.6)
=0.75734876 / 0.77117091
=0.9821

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
=60059.2 / 56414.7
=1.0646

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))
=(630.3 / (630.3 + 668.9)) / (660.3 / (660.3 + 629.3))
=0.4851447 / 0.51201923
=0.9475

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)
=(11520.2 / 60059.2) / (10273.6 / 56414.7)
=0.19181408 / 0.18210856
=1.0533

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)
=((7834 + 15152.1) / 53478.4) / ((7606.3 + 14632.6) / 53025.6)
=0.42982026 / 0.41939931
=1.0248

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
=(2301.4 - 508.1 - 3049.7) / 53478.4
=-0.0235

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.

Aetna Inc has a M-score of -2.38 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 own currency.

Aetna Inc Annual Data

Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15
DSRI 2.43331.03450.84090.66461.15770.92781.02241.70871.0031
GMI 01.02521.09831.07130.89310.91541.02261.15540.9872
AQI 1.53680.99150.95590.94990.99191.04030.94641.00510.9682
SGI 1.1181.09761.12141.12320.98510.98651.08341.29221.2264
DEPI 0.87761.04071.04861.03970.94261.02480.97991.0310.9102
SGAI 0.96840.95381.01630.98811.03681.05810.93280.9731.0221
LVGI 1.01511.06361.46450.9971.04021.00031.11081.13591.0634
TATA 0.0003-0.0046-0.0229-0.03140.0119-0.0105-0.0095-0.0099-0.0329
M-score -1.38-2.38-2.74-2.80-2.38-2.64-2.47-1.57-2.48

Aetna Inc Quarterly Data

Sep13Dec13Mar14Jun14Sep14Dec14Mar15Jun15Sep15Dec15
DSRI 0.54721.70870.54530.86062.1721.00312.70971.12851.2202
GMI 1.03511.15541.13341.11691.06390.98720.98150.95440.9584
AQI 0.9421.00511.00140.99730.98640.96820.97340.9770.9821
SGI 1.24961.29221.39031.37071.28091.22641.14211.09341.0646
DEPI 1.09491.0310.96850.84310.86590.91020.95040.96760.9475
SGAI 0.9510.9730.96840.97270.99481.02211.04851.05751.0533
LVGI 1.26231.13591.13521.03011.02671.06341.0361.02021.0248
TATA -0.0157-0.0099-0.0206-0.03-0.0272-0.0329-0.0322-0.0218-0.0235
M-score -2.82-1.57-2.62-2.38-1.27-2.48-0.98-2.43-2.38
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