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Aetna Inc (NYSE:AET)
Beneish M-Score
-0.98 (As of Today)

Warning Sign:

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.

Aetna Inc has a M-score of -0.98 signals that the company is a manipulator.

AET' s 10-Year Beneish M-Score Range
Min: -3.51   Max: 0.31
Current: -0.98

-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 -2.67.


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 * 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
=-0.98

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

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

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)
=(5261.5 / 59102.5) / (1700.2 / 51750.5)
=0.08902331 / 0.03285379
=2.7097

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)
=(3731 / 51750.5) / (4325.5 / 59102.5)
=0.25868156 / 0.26356246
=0.9815

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 - (13391.3 + 662.6) / 55555.4) / (1 - (11414.8 + 704.1) / 52119)
=0.74702909 / 0.76747635
=0.9734

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
=59102.5 / 51750.5
=1.1421

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))
=0.46630789 / 0.49066031
=0.9504

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)
=0.18956897 / 0.18080212
=1.0485

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)
=0.44125324 / 0.42594064
=1.036

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
=(2152.8 - 515.5 - 3424) / 55555.4
=-0.0322

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.


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

Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14
DSRI 2.43331.03450.84090.66461.15770.92791.02231.70871.0031
GMI 01.02521.09831.07130.89310.91551.11961.05520.9872
AQI 1.53680.99150.95590.94990.99191.04030.94641.00510.9682
SGI 1.1181.09761.12141.12320.98510.98641.08351.29221.2264
DEPI 0.87761.04071.04861.03970.94261.02480.97991.0310.9102
SGAI 0.96840.95381.01630.98811.03681.05820.93270.9731.0221
LVGI 1.01511.06361.46450.9971.04021.00031.11081.13591.0634
TATA 0.0003-0.0046-0.0229-0.03140.0119-0.01040.0014-0.0099-0.0329
M-score -1.38-2.38-2.74-2.80-2.38-2.64-2.36-1.62-2.48

Aetna Inc Quarterly Data

Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14Dec14Mar15
DSRI 1.02231.33382.06910.54721.70870.54530.40632.1721.00312.7097
GMI 1.11961.11451.1111.12181.05521.03561.02520.98160.98720.9815
AQI 0.94640.92930.93680.9421.00511.00140.99730.98640.96820.9734
SGI 1.08351.08491.14721.24971.29221.39031.37071.28091.22641.1421
DEPI 0.97991.00241.12871.09491.0310.96850.84310.86590.91020.9504
SGAI 0.93270.92740.92630.95090.9730.96840.97270.99481.02211.0485
LVGI 1.11081.14011.2361.26231.13591.13521.03011.02671.06341.036
TATA 0.00140.0120.0116-0.0065-0.0099-0.0206-0.03-0.0272-0.0329-0.0322
M-score -2.36-2.04-1.33-2.73-1.62-2.67-2.85-1.32-2.48-0.98
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