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Aetna Inc (NYSE:AET)
Beneish M-Score
-1.27 (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 -1.27 signals that the company is a manipulator.

AET' s 10-Year Beneish M-Score Range
Min: -3.51   Max: 0.31
Current: -1.27

-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 * 2.3905+0.528 * 0.9544+0.404 * 0.977+0.892 * 1.0934+0.115 * 0.9676
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0575+4.679 * -0.0218-0.327 * 1.0202
=-1.27

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

This Year (Jun15) TTM:Last Year (Jun14) TTM:
Accounts Receivable was $5,893 Mil.
Revenue was 15240.9 + 15094.1 + 14771.2 + 14727.8 = $59,834 Mil.
Gross Profit was 4205.4 + 4325.5 + 3731 + 3851.7 = $16,114 Mil.
Total Current Assets was $12,982 Mil.
Total Assets was $54,641 Mil.
Property, Plant and Equipment(Net PPE) was $653 Mil.
Depreciation, Depletion and Amortization(DDA) was $648 Mil.
Selling, General & Admin. Expense(SGA) was $11,405 Mil.
Total Current Liabilities was $15,802 Mil.
Long-Term Debt was $7,840 Mil.
Net Income was 731.8 + 777.5 + 232 + 594.5 = $2,336 Mil.
Non Operating Income was -63.7 + -63.2 + 700.1 + -59.5 = $514 Mil.
Cash Flow from Operations was 255.7 + 1473.4 + 294.1 + 987.4 = $3,011 Mil.
Accounts Receivable was $2,254 Mil.
Revenue was 14509.4 + 13994.8 + 13182.7 + 13035.6 = $54,723 Mil.
Gross Profit was 3669 + 3839.8 + 3293.1 + 3262.6 = $14,065 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.



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)
=(5892.5 / 59834) / (2254.4 / 54722.5)
=0.0984808 / 0.04119695
=2.3905

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)
=(4325.5 / 54722.5) / (4205.4 / 59834)
=0.25701494 / 0.26930508
=0.9544

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 - (12982.1 + 653.2) / 54641.1) / (1 - (11647.1 + 680.2) / 53160.7)
=0.75045707 / 0.76811253
=0.977

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
=59834 / 54722.5
=1.0934

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))
=(632.4 / (632.4 + 680.2)) / (647.8 / (647.8 + 653.2))
=0.48179186 / 0.49792467
=0.9676

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)
=(11404.6 / 59834) / (9863.4 / 54722.5)
=0.190604 / 0.18024396
=1.0575

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)
=((7840.1 + 15801.5) / 54641.1) / ((7612.4 + 14932.7) / 53160.7)
=0.43267065 / 0.42409336
=1.0202

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
=(2335.8 - 513.7 - 3010.6) / 54641.1
=-0.0218

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 -1.27 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

Mar13Jun13Sep13Dec13Mar14Jun14Sep14Dec14Mar15Jun15
DSRI 1.33382.06910.54721.70870.54530.40632.1721.00312.70972.3905
GMI 1.11451.1111.12181.05521.03561.02520.98160.98720.98150.9544
AQI 0.92930.93680.9421.00511.00140.99730.98640.96820.97340.977
SGI 1.08491.14721.24971.29221.39031.37071.28091.22641.14211.0934
DEPI 1.00241.12871.09491.0310.96850.84310.86590.91020.95040.9676
SGAI 0.92740.92630.95090.9730.96840.97270.99481.02211.04851.0575
LVGI 1.14011.2361.26231.13591.13521.03011.02671.06341.0361.0202
TATA 0.0120.0116-0.0065-0.0099-0.0206-0.03-0.0272-0.0329-0.0322-0.0218
M-score -2.04-1.33-2.73-1.62-2.67-2.85-1.32-2.48-0.98-1.27
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