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Beneish M-Score -0.98 higher than -2.22, which implies that it might have manipulated its financial results.
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.
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 -2.67.
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 * 2.7097||+||0.528 * 0.9815||+||0.404 * 0.9734||+||0.892 * 1.1421||+||0.115 * 0.9504|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0485||+||4.679 * -0.0322||-||0.327 * 1.036|
|This Year (Mar15) TTM:||Last Year (Mar14) TTM:|
|Accounts Receivable was $5,262 Mil.|
Revenue was 15094.1 + 14771.2 + 14727.8 + 14509.4 = $59,103 Mil.
Gross Profit was 4325.5 + 3731 + 3851.7 + 3669 = $15,577 Mil.
Total Current Assets was $13,391 Mil.
Total Assets was $55,555 Mil.
Property, Plant and Equipment(Net PPE) was $663 Mil.
Depreciation, Depletion and Amortization(DDA) was $638 Mil.
Selling, General & Admin. Expense(SGA) was $11,204 Mil.
Total Current Liabilities was $16,668 Mil.
Long-Term Debt was $7,846 Mil.
Net Income was 777.5 + 232 + 594.5 + 548.8 = $2,153 Mil.
Non Operating Income was -63.2 + 700.1 + -59.5 + -61.9 = $516 Mil.
Cash Flow from Operations was 1473.4 + 294.1 + 987.4 + 669.1 = $3,424 Mil.
|Accounts Receivable was $1,700 Mil.
Revenue was 13994.8 + 13182.7 + 13035.6 + 11537.4 = $51,751 Mil.
Gross Profit was 3839.8 + 3293.1 + 3262.6 + 2991.4 = $13,387 Mil.
Total Current Assets was $11,415 Mil.
Total Assets was $52,119 Mil.
Property, Plant and Equipment(Net PPE) was $704 Mil.
Depreciation, Depletion and Amortization(DDA) was $615 Mil.
Selling, General & Admin. Expense(SGA) was $9,357 Mil.
Total Current Liabilities was $14,581 Mil.
Long-Term Debt was $7,618 Mil.
1. DSRI = Days Sales in Receivables Index
A large increase in DSR could be indicative of revenue inflation.
|DSRI||=||(Receivables_t / Revenue_t)||/||(Receivables_t-1 / Revenue_t-1)|
|=||(5261.5 / 59102.5)||/||(1700.2 / 51750.5)|
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.
|=||(GrossProfit_t-1 / Revenue_t-1)||/||(GrossProfit_t / Revenue_t)|
|=||(3731 / 51750.5)||/||(4325.5 / 59102.5)|
3. AQI = Asset Quality Index
AQI is the ratio of asset quality in year t to year t-1.
|AQI||=||(1 - (CurrentAssets_t + PPE_t) / TotalAssets_t)||/||(1 - (CurrentAssets_t-1 + PPE_t-1) / TotalAssets_t-1)|
|=||(1 - (13391.3 + 662.6) / 55555.4)||/||(1 - (11414.8 + 704.1) / 52119)|
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.
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))|
|=||(615.2 / (615.2 + 704.1))||/||(638.3 / (638.3 + 662.6))|
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)|
|=||(11204 / 59102.5)||/||(9356.6 / 51750.5)|
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)|
|=||((7846.1 + 16667.9) / 55555.4)||/||((7618.4 + 14581.2) / 52119)|
8. TATA = Total Accruals to Total Assets
Total accruals calculated as the change in working capital accounts other than cash less depreciation.
|=||(NetIncome_t - NonOperatingIncome_t||-||CashFlowsfromOperations_t)||/||TotalAssets_t|
|=||(2152.8 - 515.5||-||3424)||/||55555.4|
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 -0.98 signals that the company is likely to be a manipulator.
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
Aetna Inc Annual Data
Aetna Inc Quarterly Data