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Aetna Inc (NYSE:AET)
Beneish M-Score
-2.11 (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 -2.11 signals that the company is a manipulator.

AET' s 10-Year Beneish M-Score Range
Min: -2.97   Max: -1.33
Current: -2.11

-2.97
-1.33

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.


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 * 1.1256+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
=-2.11

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

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

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)
=(3509.2 / 51750.5) / (2242.4 / 37221.7)
=0.06780997 / 0.06024443
=1.1256

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)
=(3194.1 / 37221.7) / (3839.8 / 51750.5)
=0.2678948 / 0.25676853
=1.0433

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 - (11414.8 + 704.1) / 52119) / (1 - (9392.7 + 538.5) / 42517.2)
=0.76747635 / 0.76641924
=1.0014

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
=51750.5 / 37221.7
=1.3903

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))
=0.45162933 / 0.46630789
=0.9685

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)
=0.18080212 / 0.18670829
=0.9684

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)
=0.42594064 / 0.3752105
=1.1352

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
=(2089 - -250.3 - 3157.1) / 52119
=-0.0157

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.


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

Dec04Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13
DSRI 2.43331.03450.84090.66461.15770.92791.02231.7087
GMI 01.02521.09831.07130.89310.91551.11961.0639
AQI 1.53680.99150.95590.94990.99191.04030.94641.003
SGI 1.1181.09761.12141.12320.98510.98641.08351.2922
DEPI 0.87761.04071.04861.03970.94261.02480.97991.031
SGAI 0.96840.95381.01630.98811.03681.05820.93270.973
LVGI 1.01511.06361.46450.9971.04021.00031.11081.1407
TATA 0.0003-0.0046-0.0229-0.03140.0119-0.01040.0014-0.0047
M-score -1.38-2.38-2.74-2.80-2.38-2.64-2.36-1.59

Aetna Inc Quarterly Data

Dec11Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14
DSRI 0.92790.88550.89691.08041.02231.33382.06912.02821.70871.1256
GMI 0.91550.95160.98581.03671.11961.11451.1111.12181.06391.0433
AQI 1.04031.01040.99411.02680.94640.92930.93680.9421.0031.0014
SGI 0.98641.00871.02931.04431.08351.08491.14721.24971.29221.3903
DEPI 1.02481.02190.99971.00420.97991.00241.12871.09491.0310.9685
SGAI 1.05821.04291.0250.94690.93270.92740.92630.95090.9730.9684
LVGI 1.00031.03751.0350.99131.11081.14011.2361.26231.14071.1352
TATA -0.0104-0.0232-0.01910.00620.00140.0120.0116-0.0065-0.0047-0.0157
M-score -2.64-2.72-2.66-2.29-2.36-2.04-1.33-1.37-1.59-2.11
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