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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 -2.11 signals that the company is 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 -2.65.
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 * 1.1256||+||0.528 * 1.0433||+||0.404 * 1.0014||+||0.892 * 1.3903||+||0.115 * 0.9685|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9684||+||4.679 * -0.0157||-||0.327 * 1.1352|
|This Year (Mar14) TTM:||Last Year (Mar13) TTM:|
|Accounts Receivable was $3,509 Mil.|
Revenue was 13994.8 + 13182.7 + 13035.6 + 11537.4 = $51,751 Mil.
Gross Profit was 3839.8 + 3194.1 + 3262.6 + 2991.4 = $13,288 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.
Net Income was 665.5 + 368.9 + 518.6 + 536 = $2,089 Mil.
Non Operating Income was -154.1 + -65.1 + -65.3 + 34.2 = $-250 Mil.
Cash Flow from Operations was 1422.2 + 624.1 + 1071.1 + 39.7 = $3,157 Mil.
|Accounts Receivable was $2,242 Mil.
Revenue was 9538.9 + 9929.6 + 8917.3 + 8835.9 = $37,222 Mil.
Gross Profit was 2600.1 + 2375.2 + 2552.3 + 2443.9 = $9,972 Mil.
Total Current Assets was $9,393 Mil.
Total Assets was $42,517 Mil.
Property, Plant and Equipment(Net PPE) was $539 Mil.
Depreciation, Depletion and Amortization(DDA) was $444 Mil.
Selling, General & Admin. Expense(SGA) was $6,950 Mil.
Total Current Liabilities was $9,469 Mil.
Long-Term Debt was $6,484 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)|
|=||(3509.2 / 51750.5)||/||(2242.4 / 37221.7)|
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)|
|=||(3194.1 / 37221.7)||/||(3839.8 / 51750.5)|
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 - (11414.8 + 704.1) / 52119)||/||(1 - (9392.7 + 538.5) / 42517.2)|
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))|
|=||(443.5 / (443.5 + 538.5))||/||(615.2 / (615.2 + 704.1))|
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)|
|=||(9356.6 / 51750.5)||/||(6949.6 / 37221.7)|
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)|
|=||((7618.4 + 14581.2) / 52119)||/||((6483.8 + 9469.1) / 42517.2)|
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|
|=||(2089 - -250.3||-||3157.1)||/||52119|
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 -2.11 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