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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 -2.40 suggests that the company is not a manipulator.
During the past 13 years, the highest Beneish M-Score of Aetna Inc was -1.33. The lowest was -2.97. And the median was -2.64.
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 * 0.8606||+||0.528 * 1.0324||+||0.404 * 0.9973||+||0.892 * 1.3707||+||0.115 * 0.8431|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9727||+||4.679 * -0.0252||-||0.327 * 1.0301|
|This Year (Jun14) TTM:||Last Year (Jun13) TTM:|
|Accounts Receivable was $4,776 Mil.|
Revenue was 14509.4 + 13994.8 + 13182.7 + 13035.6 = $54,723 Mil.
Gross Profit was 3669 + 3839.8 + 3194.1 + 3262.6 = $13,966 Mil.
Total Current Assets was $11,647 Mil.
Total Assets was $53,161 Mil.
Property, Plant and Equipment(Net PPE) was $680 Mil.
Depreciation, Depletion and Amortization(DDA) was $632 Mil.
Selling, General & Admin. Expense(SGA) was $9,863 Mil.
Total Current Liabilities was $14,933 Mil.
Long-Term Debt was $7,612 Mil.
Net Income was 548.8 + 665.5 + 368.9 + 518.6 = $2,102 Mil.
Non Operating Income was -61.9 + -154.1 + -65.1 + -65.3 = $-346 Mil.
Cash Flow from Operations was 669.1 + 1422.2 + 624.1 + 1071.1 = $3,787 Mil.
|Accounts Receivable was $4,048 Mil.
Revenue was 11537.4 + 9538.9 + 9929.6 + 8917.3 = $39,923 Mil.
Gross Profit was 2991.4 + 2600.1 + 2375.2 + 2552.3 = $10,519 Mil.
Total Current Assets was $10,739 Mil.
Total Assets was $49,730 Mil.
Property, Plant and Equipment(Net PPE) was $689 Mil.
Depreciation, Depletion and Amortization(DDA) was $471 Mil.
Selling, General & Admin. Expense(SGA) was $7,398 Mil.
Total Current Liabilities was $12,194 Mil.
Long-Term Debt was $8,280 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)|
|=||(4775.6 / 54722.5)||/||(4048.4 / 39923.2)|
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)|
|=||(3839.8 / 39923.2)||/||(3669 / 54722.5)|
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 - (11647.1 + 680.2) / 53160.7)||/||(1 - (10739.4 + 688.7) / 49730.3)|
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))|
|=||(471.1 / (471.1 + 688.7))||/||(632.4 / (632.4 + 680.2))|
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)|
|=||(9863.4 / 54722.5)||/||(7397.6 / 39923.2)|
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)|
|=||((7612.4 + 14932.7) / 53160.7)||/||((8280.1 + 12194.2) / 49730.3)|
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|
|=||(2101.8 - -346.4||-||3786.5)||/||53160.7|
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 -2.40 suggests that the company will not 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