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Aetna Inc (NYSE:AET)
Beneish M-Score
-2.78 (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 -2.78 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: -2.78

-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 -2.57.


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 * 0.9701+0.528 * 1.0071+0.404 * 0.7714+0.892 * 1.0303+0.115 * 0.9382
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.994+4.679 * -0.0258-0.327 * 1.2536
=-2.78

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

This Year (Jun16) TTM:Last Year (Jun15) TTM:
Accounts Receivable was $5,890 Mil.
Revenue was 15952.3 + 15693.4 + 15048.5 + 14953 = $61,647 Mil.
Gross Profit was 4194.7 + 4316.8 + 3958.3 + 4014.7 = $16,485 Mil.
Total Current Assets was $29,125 Mil.
Total Assets was $70,602 Mil.
Property, Plant and Equipment(Net PPE) was $605 Mil.
Depreciation, Depletion and Amortization(DDA) was $684 Mil.
Selling, General & Admin. Expense(SGA) was $11,678 Mil.
Total Current Liabilities was $18,274 Mil.
Long-Term Debt was $20,019 Mil.
Net Income was 790.8 + 726.6 + 320.8 + 560.1 = $2,398 Mil.
Non Operating Income was 65.7 + -62.8 + -63.4 + -65.1 = $-126 Mil.
Cash Flow from Operations was 428.9 + 1780.9 + 1110.5 + 1026.5 = $4,347 Mil.
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 $11,402 Mil.
Total Current Liabilities was $15,802 Mil.
Long-Term Debt was $7,840 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)
=(5889.6 / 61647.2) / (5892.5 / 59834)
=0.09553719 / 0.0984808
=0.9701

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)
=(16113.6 / 59834) / (16484.5 / 61647.2)
=0.26930508 / 0.26740063
=1.0071

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 - (29125.3 + 605) / 70602) / (1 - (12982.1 + 653.2) / 54641.1)
=0.57890286 / 0.75045707
=0.7714

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
=61647.2 / 59834
=1.0303

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))
=(647.8 / (647.8 + 653.2)) / (684.2 / (684.2 + 605))
=0.49792467 / 0.53071672
=0.9382

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)
=(11677.5 / 61647.2) / (11402.1 / 59834)
=0.18942466 / 0.19056222
=0.994

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)
=((20019.1 + 18273.9) / 70602) / ((7840.1 + 15801.5) / 54641.1)
=0.5423784 / 0.43267065
=1.2536

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
=(2398.3 - -125.6 - 4346.8) / 70602
=-0.0258

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 -2.78 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 2.43331.03450.84090.66461.15770.92781.02241.70871.00310.8764
GMI 3.34131.02521.09831.07130.89310.91541.02261.16490.97910.9512
AQI 1.53680.99150.95590.94990.99191.04030.94641.00510.96820.9773
SGI 1.1181.09761.12141.12320.98510.98651.08341.29221.22641.0402
DEPI 0.87761.04071.04861.03970.94261.02480.97991.0310.91020.9386
SGAI 0.96840.95381.01630.98811.03681.05810.93280.9731.02211.0333
LVGI 1.01511.06361.46450.9971.04021.00031.11081.13591.06341.0039
TATA -0.0028-0.0082-0.0295-0.03770.0119-0.01050.0241-0.0048-0.017-0.0228
M-score 0.37-2.40-2.77-2.83-2.38-2.64-2.31-1.54-2.41-2.71

Aetna Inc Quarterly Data

Mar14Jun14Sep14Dec14Mar15Jun15Sep15Dec15Mar16Jun16
DSRI 0.54530.86062.1721.00312.70971.12851.22020.87640.89970.9701
GMI 1.14181.12481.07110.97910.97420.94760.9520.95120.97361.0071
AQI 1.00140.99730.98640.96820.97340.9770.98210.97730.95880.7714
SGI 1.39031.37071.28091.22641.14211.09341.06461.04021.0311.0303
DEPI 0.96850.84310.86590.91020.95040.96760.94750.93860.93750.9382
SGAI 0.96840.97270.99481.02211.04841.05721.05311.03311.01250.994
LVGI 1.13521.03011.02671.06341.0361.02021.02481.00391.01611.2536
TATA -0.0157-0.0252-0.0223-0.017-0.0169-0.0062-0.0076-0.0228-0.028-0.0258
M-score -2.59-2.35-1.25-2.41-0.91-2.36-2.31-2.71-2.72-2.78
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