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Aetna Inc (NYSE:AET)
Beneish M-Score
-2.47 (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 -2.47 suggests that the company is not a manipulator.

AET' s 10-Year Beneish M-Score Range
Min: -2.92   Max: -1.74
Current: -2.47

-2.92
-1.74

During the past 13 years, the highest Beneish M-Score of Aetna Inc was -1.74. The lowest was -2.92. And the median was -2.64.


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 * 1.0031+0.528 * 0.9872+0.404 * 0.9682+0.892 * 1.2264+0.115 * 0.9102
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0221+4.679 * -0.0329-0.327 * 1.0231
=-2.47

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

This Year (Dec14) TTM:Last Year (Dec13) TTM:
Accounts Receivable was $4,889 Mil.
Revenue was 14771.2 + 14727.8 + 14509.4 + 13994.8 = $58,003 Mil.
Gross Profit was 3731 + 3851.7 + 3669 + 3839.8 = $15,092 Mil.
Total Current Assets was $11,764 Mil.
Total Assets was $53,402 Mil.
Property, Plant and Equipment(Net PPE) was $670 Mil.
Depreciation, Depletion and Amortization(DDA) was $629 Mil.
Selling, General & Admin. Expense(SGA) was $10,838 Mil.
Total Current Liabilities was $15,357 Mil.
Long-Term Debt was $14,279 Mil.
Net Income was 232 + 594.5 + 548.8 + 665.5 = $2,041 Mil.
Non Operating Income was 700.1 + -59.5 + -61.9 + -154.1 = $425 Mil.
Cash Flow from Operations was 294.1 + 987.4 + 669.1 + 1422.2 = $3,373 Mil.
Accounts Receivable was $3,974 Mil.
Revenue was 13182.7 + 13035.6 + 11537.4 + 9538.9 = $47,295 Mil.
Gross Profit was 3293.1 + 3262.6 + 2991.4 + 2600.1 = $12,147 Mil.
Total Current Assets was $9,612 Mil.
Total Assets was $49,765 Mil.
Property, Plant and Equipment(Net PPE) was $722 Mil.
Depreciation, Depletion and Amortization(DDA) was $569 Mil.
Selling, General & Admin. Expense(SGA) was $8,645 Mil.
Total Current Liabilities was $12,473 Mil.
Long-Term Debt was $14,522 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)
=(4888.5 / 58003.2) / (3973.8 / 47294.6)
=0.08427983 / 0.08402228
=1.0031

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)
=(3851.7 / 47294.6) / (3731 / 58003.2)
=0.25684116 / 0.26018392
=0.9872

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 - (11764 + 669.8) / 53402.1) / (1 - (9611.9 + 721.9) / 49764.8)
=0.76716646 / 0.7923472
=0.9682

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
=58003.2 / 47294.6
=1.2264

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))
=(569.1 / (569.1 + 721.9)) / (629 / (629 + 669.8))
=0.44082107 / 0.48429319
=0.9102

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)
=(10837.7 / 58003.2) / (8645.4 / 47294.6)
=0.18684659 / 0.18279888
=1.0221

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)
=((14279.4 + 15356.5) / 53402.1) / ((14522.1 + 12473) / 49764.8)
=0.55495758 / 0.5424537
=1.0231

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
=(2040.8 - 424.6 - 3372.8) / 53402.1
=-0.0329

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 -2.47 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

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 1.01511.06361.46450.9971.04021.00031.11081.50771.0231
TATA 0.0003-0.0046-0.0229-0.03140.0119-0.01040.0014-0.0099-0.0329
M-score -1.38-2.38-2.74-2.80-2.38-2.64-2.36-1.74-2.47

Aetna Inc Quarterly Data

Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14Dec14
DSRI 1.08041.02231.33382.06910.54721.70870.54530.40632.1721.0031
GMI 1.03671.11961.11451.1111.12181.05521.03561.02520.98160.9872
AQI 1.02680.94640.92930.93680.9421.00511.00140.99730.98640.9682
SGI 1.04431.08351.08491.14721.24971.29221.39031.37071.28091.2264
DEPI 1.00420.97991.00241.12871.09491.0310.96850.84310.86590.9102
SGAI 0.94690.93270.92740.92630.95090.9730.96840.97270.99481.0221
LVGI 0.99131.11081.14011.2361.26231.50771.13521.03011.02671.0231
TATA 0.00620.00140.0120.0116-0.0065-0.0099-0.0206-0.03-0.0272-0.0329
M-score -2.29-2.36-2.04-1.33-2.73-1.74-2.67-2.85-1.32-2.47
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