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Aetna Inc (NYSE:AET)
Beneish M-Score
-2.72 (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 -2.72 suggests that the company is not a manipulator.

AET' s Beneish M-Score Range Over the Past 10 Years
Min: -3.1   Max: 1.64
Current: -2.72

-3.1
1.64

During the past 13 years, the highest Beneish M-Score of Aetna Inc was 1.64. The lowest was -3.10. And the median was -2.56.


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 * 0.8997+0.528 * 0.9736+0.404 * 0.9588+0.892 * 1.031+0.115 * 0.9375
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0125+4.679 * -0.028-0.327 * 1.0161
=-2.72

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

This Year (Mar16) TTM:Last Year (Mar15) TTM:
Accounts Receivable was $4,880 Mil.
Revenue was 15693.4 + 15048.5 + 14953 + 15240.9 = $60,936 Mil.
Gross Profit was 4316.8 + 3958.3 + 4014.7 + 4205.4 = $16,495 Mil.
Total Current Assets was $15,394 Mil.
Total Assets was $56,424 Mil.
Property, Plant and Equipment(Net PPE) was $616 Mil.
Depreciation, Depletion and Amortization(DDA) was $677 Mil.
Selling, General & Admin. Expense(SGA) was $11,696 Mil.
Total Current Liabilities was $17,915 Mil.
Long-Term Debt was $7,383 Mil.
Net Income was 726.6 + 320.8 + 560.1 + 731.8 = $2,339 Mil.
Non Operating Income was -62.8 + -63.4 + -65.1 + -63.7 = $-255 Mil.
Cash Flow from Operations was 1780.9 + 1110.5 + 1026.5 + 255.7 = $4,174 Mil.
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.



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)
=(4880.4 / 60935.8) / (5261.5 / 59102.5)
=0.08009085 / 0.08902331
=0.8997

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)
=(15577.2 / 59102.5) / (16495.2 / 60935.8)
=0.26356246 / 0.27069801
=0.9736

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 - (15393.6 + 616.1) / 56423.7) / (1 - (13391.3 + 662.6) / 55555.4)
=0.7162593 / 0.74702909
=0.9588

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
=60935.8 / 59102.5
=1.031

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))
=(638.3 / (638.3 + 662.6)) / (676.5 / (676.5 + 616.1))
=0.49066031 / 0.52336376
=0.9375

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)
=(11696.2 / 60935.8) / (11204 / 59102.5)
=0.191943 / 0.18956897
=1.0125

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)
=((7382.5 + 17915.2) / 56423.7) / ((7846.1 + 16667.9) / 55555.4)
=0.44835238 / 0.44125324
=1.0161

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
=(2339.3 - -255 - 4173.6) / 56423.7
=-0.028

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 -2.72 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 2.43331.03450.84090.66461.15770.92791.02241.70851.00310.8764
GMI 3.34131.02521.09831.07130.89310.91551.11971.06380.97910.9512
AQI 1.53680.99150.95590.95160.99011.04030.94641.0030.97030.9773
SGI 1.1181.09761.12141.12320.98510.98641.08341.29231.22641.0402
DEPI 0.87761.04071.04861.03970.94261.02480.97991.0310.91020.9386
SGAI 0.98930.95381.01630.98811.03681.05820.93280.97281.02211.0333
LVGI 1.01511.06361.46451.00571.03131.00031.11381.13771.05891.0039
TATA 0.0003-0.0082-0.0295-0.03770.0027-0.01040.0015-0.0047-0.017-0.0228
M-score 0.38-2.40-2.77-2.83-2.42-2.64-2.36-1.59-2.41-2.71

Aetna Inc Quarterly Data

Dec13Mar14Jun14Sep14Dec14Mar15Jun15Sep15Dec15Mar16
DSRI 1.70850.54530.86062.17191.00312.70971.12851.22020.87640.8997
GMI 1.06381.04331.03240.98830.97910.97420.94760.9520.95120.9736
AQI 1.0031.00140.99730.98640.97030.97340.9770.98210.97730.9588
SGI 1.29231.39041.37081.2811.22641.14211.09341.06461.04021.031
DEPI 1.0310.96850.84310.86590.91020.95040.96760.94750.93860.9375
SGAI 0.97280.96830.97270.99471.02211.04851.05751.05331.03331.0125
LVGI 1.13771.13521.03011.02671.05891.0361.02021.02481.00391.0161
TATA -0.0047-0.0157-0.0252-0.0223-0.017-0.0169-0.0062-0.0076-0.0228-0.028
M-score -1.59-2.64-2.40-1.29-2.41-0.91-2.36-2.31-2.71-2.72
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