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GuruFocus has detected 1 Warning Sign with Express Scripts Holding Co $ESRX.
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Express Scripts Holding Co (NAS:ESRX)
Beneish M-Score
-2.58 (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.

Express Scripts Holding Co has a M-score of -2.58 suggests that the company is not a manipulator.

ESRX' s Beneish M-Score Range Over the Past 10 Years
Min: -2.92   Max: 2.22
Current: -2.58

-2.92
2.22

During the past 13 years, the highest Beneish M-Score of Express Scripts Holding Co was 2.22. The lowest was -2.92. And the median was -2.56.


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 Express Scripts Holding Co 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 * 1.066+0.528 * 0.9606+0.404 * 0.9829+0.892 * 0.9856+0.115 * 1.0283
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.8823+4.679 * -0.0293-0.327 * 1.0347
=-2.58

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

This Year (Dec16) TTM:Last Year (Dec15) TTM:
Accounts Receivable was $7,062 Mil.
Revenue was 24863.3 + 25410.1 + 25222.3 + 24791.8 = $100,288 Mil.
Gross Profit was 2338.2 + 2274.1 + 2161.2 + 1847 = $8,621 Mil.
Total Current Assets was $12,363 Mil.
Total Assets was $51,745 Mil.
Property, Plant and Equipment(Net PPE) was $1,274 Mil.
Depreciation, Depletion and Amortization(DDA) was $2,155 Mil.
Selling, General & Admin. Expense(SGA) was $3,533 Mil.
Total Current Liabilities was $16,428 Mil.
Long-Term Debt was $14,846 Mil.
Net Income was 1434.7 + 722.9 + 720.7 + 526.1 = $3,404 Mil.
Non Operating Income was 0 + 0 + 0 + 0 = $0 Mil.
Cash Flow from Operations was 2248.9 + 1480.4 + 438.9 + 751.2 = $4,919 Mil.
Accounts Receivable was $6,721 Mil.
Revenue was 26175.4 + 25222.6 + 25454.2 + 24899.6 = $101,752 Mil.
Gross Profit was 2263.2 + 2173.5 + 2131.2 + 1834 = $8,402 Mil.
Total Current Assets was $12,060 Mil.
Total Assets was $53,243 Mil.
Property, Plant and Equipment(Net PPE) was $1,291 Mil.
Depreciation, Depletion and Amortization(DDA) was $2,359 Mil.
Selling, General & Admin. Expense(SGA) was $4,063 Mil.
Total Current Liabilities was $17,155 Mil.
Long-Term Debt was $13,946 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)
=(7062.1 / 100287.5) / (6721.3 / 101751.8)
=0.07041855 / 0.06605583
=1.066

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)
=(8401.9 / 101751.8) / (8620.5 / 100287.5)
=0.0825725 / 0.08595787
=0.9606

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 - (12363.4 + 1273.6) / 51744.9) / (1 - (12059.5 + 1291.3) / 53243.3)
=0.73645712 / 0.7492492
=0.9829

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
=100287.5 / 101751.8
=0.9856

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))
=(2359.1 / (2359.1 + 1291.3)) / (2154.6 / (2154.6 + 1273.6))
=0.64625794 / 0.62849309
=1.0283

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)
=(3532.7 / 100287.5) / (4062.6 / 101751.8)
=0.03522573 / 0.03992657
=0.8823

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)
=((14846 + 16428.1) / 51744.9) / ((13946.3 + 17155.3) / 53243.3)
=0.60439 / 0.5841411
=1.0347

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
=(3404.4 - 0 - 4919.4) / 51744.9
=-0.0293

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.

Express Scripts Holding Co has a M-score of -2.58 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 local exchange's currency.

Express Scripts Holding Co Annual Data

Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15Dec16
DSRI 0.88020.81131.93530.37591.08531.39410.66751.53381.11441.066
GMI 0.86991.04110.94711.49060.94530.89190.99870.99450.95130.9606
AQI 0.95171.00691.05931.10020.66611.72161.030.95490.96810.9829
SGI 1.0411.20271.12491.81911.02572.03161.11080.96911.00860.9856
DEPI 1.07581.021.29890.59321.04730.70850.89631.01690.90691.0283
SGAI 1.04210.8961.08320.52650.9842.48340.91270.97370.93180.8823
LVGI 1.11240.91510.90360.91141.32260.60070.99081.08891.12211.0347
TATA -0.0456-0.0589-0.0791-0.0887-0.0588-0.0599-0.0544-0.0473-0.0445-0.0293
M-score -2.89-2.68-1.83-2.38-2.91-1.40-2.92-2.28-2.65-2.58

Express Scripts Holding Co Quarterly Data

Sep14Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16Dec16
DSRI 1.31511.53381.48441.23031.14021.11441.16661.14690.94531.066
GMI 1.0070.99450.99230.97940.97330.95130.94750.95330.96070.9606
AQI 0.98240.95490.97531.01080.98590.96810.97190.97430.97460.9829
SGI 0.94960.96911.00331.01941.01531.00860.99550.98990.99720.9856
DEPI 1.02821.01690.98860.9530.91970.90690.92160.95420.98671.0283
SGAI 0.97850.97370.94930.93930.93140.93180.92780.92030.89550.8823
LVGI 1.13491.08891.05411.13951.12871.12211.25241.03751.05031.0347
TATA -0.0488-0.0473-0.0435-0.045-0.0503-0.0445-0.0539-0.0428-0.055-0.0293
M-score -2.50-2.28-2.26-2.51-2.63-2.65-2.70-2.59-2.82-2.58
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