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Aetna Inc (NYSE:AET)
Beneish M-Score
-2.71 (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 -2.71 suggests that the company is not a manipulator.

AET' s Beneish M-Score Range Over the Past 10 Years
Min: -2.94   Max: -1.38
Current: -2.71

-2.94
-1.38

During the past 13 years, the highest Beneish M-Score of Aetna Inc was -1.38. The lowest was -2.94. 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 * 0.8764+0.528 * 0.9512+0.404 * 0.9773+0.892 * 1.0402+0.115 * 0.9386
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0333+4.679 * -0.0228-0.327 * 1.0039
=-2.71

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

This Year (Dec15) TTM:Last Year (Dec14) TTM:
Accounts Receivable was $4,457 Mil.
Revenue was 15048.5 + 14953 + 15240.9 + 15094.1 = $60,337 Mil.
Gross Profit was 3958.3 + 4014.7 + 4205.4 + 4325.5 = $16,504 Mil.
Total Current Assets was $12,739 Mil.
Total Assets was $53,424 Mil.
Property, Plant and Equipment(Net PPE) was $630 Mil.
Depreciation, Depletion and Amortization(DDA) was $671 Mil.
Selling, General & Admin. Expense(SGA) was $11,649 Mil.
Total Current Liabilities was $15,482 Mil.
Long-Term Debt was $7,828 Mil.
Net Income was 320.8 + 560.1 + 731.8 + 777.5 = $2,390 Mil.
Non Operating Income was -63.4 + -65.1 + -63.7 + -63.2 = $-255 Mil.
Cash Flow from Operations was 1110.5 + 1026.5 + 255.7 + 1473.4 = $3,866 Mil.
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 $7,852 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)
=(4456.7 / 60336.5) / (4888.5 / 58003.2)
=0.07386408 / 0.08427983
=0.8764

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)
=(4014.7 / 58003.2) / (3958.3 / 60336.5)
=0.26018392 / 0.27353095
=0.9512

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 - (12738.5 + 629.7) / 53424.1) / (1 - (11764 + 669.8) / 53402.1)
=0.74977211 / 0.76716646
=0.9773

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
=60336.5 / 58003.2
=1.0402

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))
=(629 / (629 + 669.8)) / (671.3 / (671.3 + 629.7))
=0.48429319 / 0.5159877
=0.9386

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)
=(11649.3 / 60336.5) / (10837.7 / 58003.2)
=0.19307219 / 0.18684659
=1.0333

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)
=((7828 + 15481.5) / 53424.1) / ((7852 + 15356.5) / 53402.1)
=0.43631058 / 0.43459901
=1.0039

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
=(2390.2 - -255.4 - 3866.1) / 53424.1
=-0.0228

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 -2.71 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

Sep13Dec13Mar14Jun14Sep14Dec14Mar15Jun15Sep15Dec15
DSRI 0.54721.70870.54530.86062.1721.00312.70971.12851.22020.8764
GMI 1.03511.16491.14181.12481.07110.97910.97420.94760.9520.9512
AQI 0.9421.00511.00140.99730.98640.96820.97340.9770.98210.9773
SGI 1.24961.29221.39031.37071.28091.22641.14211.09341.06461.0402
DEPI 1.09491.0310.96850.84310.86590.91020.95040.96760.94750.9386
SGAI 0.9510.9730.96840.97270.99481.02211.04851.05751.05331.0333
LVGI 1.26231.13591.13521.03011.02671.06341.0361.02021.02481.0039
TATA 0.0126-0.0048-0.0157-0.0252-0.0223-0.017-0.0169-0.0062-0.0076-0.0228
M-score -2.69-1.54-2.59-2.35-1.25-2.41-0.91-2.36-2.31-2.71
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