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Express Scripts (NAS:ESRX)
Beneish M-Score
-2.68 (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 has a M-score of -2.68 suggests that the company is not a manipulator.

ESRX' s 10-Year Beneish M-Score Range
Min: -3.09   Max: 2.37
Current: -2.68

-3.09
2.37

During the past 13 years, the highest Beneish M-Score of Express Scripts was 2.37. The lowest was -3.09. 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 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 * 1.2056+0.528 * 1.0226+0.404 * 0.9525+0.892 * 0.9434+0.115 * 1.0063
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9566+4.679 * -0.0625-0.327 * 1.1589
=-2.68

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

This Year (Jun14) TTM:Last Year (Jun13) TTM:
Accounts Receivable was $5,178 Mil.
Revenue was 25111 + 23685 + 25781.4 + 25915.6 = $100,493 Mil.
Gross Profit was 2007.7 + 1750.4 + 2061 + 1994.2 = $7,813 Mil.
Total Current Assets was $10,452 Mil.
Total Assets was $54,634 Mil.
Property, Plant and Equipment(Net PPE) was $1,644 Mil.
Depreciation, Depletion and Amortization(DDA) was $2,348 Mil.
Selling, General & Admin. Expense(SGA) was $4,434 Mil.
Total Current Liabilities was $15,984 Mil.
Long-Term Debt was $12,166 Mil.
Net Income was 515.2 + 328.3 + 501.9 + 426.7 = $1,772 Mil.
Non Operating Income was 4.7 + 1.7 + 9.7 + 6.3 = $22 Mil.
Cash Flow from Operations was 735.5 + 454 + 2935.1 + 1039.9 = $5,165 Mil.
Accounts Receivable was $4,553 Mil.
Revenue was 26425 + 26063 + 27033.6 + 26999.4 = $106,521 Mil.
Gross Profit was 2117.6 + 1966.6 + 2250.8 + 2134.5 = $8,470 Mil.
Total Current Assets was $8,303 Mil.
Total Assets was $54,582 Mil.
Property, Plant and Equipment(Net PPE) was $1,664 Mil.
Depreciation, Depletion and Amortization(DDA) was $2,413 Mil.
Selling, General & Admin. Expense(SGA) was $4,913 Mil.
Total Current Liabilities was $10,618 Mil.
Long-Term Debt was $13,649 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)
=(5178.2 / 100493) / (4552.8 / 106521)
=0.05152797 / 0.04274087
=1.2056

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)
=(1750.4 / 106521) / (2007.7 / 100493)
=0.07951014 / 0.07774969
=1.0226

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 - (10452.4 + 1644.1) / 54633.8) / (1 - (8302.8 + 1663.6) / 54581.5)
=0.77858944 / 0.81740333
=0.9525

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
=100493 / 106521
=0.9434

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))
=(2412.6 / (2412.6 + 1663.6)) / (2348 / (2348 + 1644.1))
=0.59187479 / 0.58816162
=1.0063

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)
=(4433.8 / 100493) / (4913 / 106521)
=0.04412049 / 0.04612236
=0.9566

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)
=((12165.5 + 15984.4) / 54633.8) / ((13648.5 + 10618.3) / 54581.5)
=0.51524697 / 0.44459753
=1.1589

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
=(1772.1 - 22.4 - 5164.5) / 54633.8
=-0.0625

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 has a M-score of -2.68 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.

Express Scripts Annual Data

Dec04Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13
DSRI 0.91961.22430.88230.85790.81131.9370.37561.08531.4060.6618
GMI 1.04320.84750.86960.87681.04110.94561.4930.94530.8910.9997
AQI 1.11931.00671.11060.95271.00691.05841.10120.66611.72151.0301
SGI 1.13691.07621.08571.03471.20271.12611.81721.02572.03471.1091
DEPI 0.83620.96940.96091.07221.021.28940.59761.04730.70870.896
SGAI 0.95121.14511.11471.01340.8961.08840.52390.98692.48730.9086
LVGI 1.01251.11761.04841.11240.91510.90360.91141.32260.60070.9908
TATA -0.0593-0.0712-0.0357-0.0456-0.0589-0.0791-0.0887-0.0587-0.0599-0.055
M-score -2.65-2.68-2.74-2.91-2.68-1.83-2.37-2.91-1.39-2.93

Express Scripts Quarterly Data

Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14
DSRI 1.00322.19181.8551.4060.93560.45250.6690.66130.96341.2056
GMI 0.96830.93570.92270.8910.88990.91610.95010.99971.00911.0226
AQI 0.53841.14651.22041.72152.24611.01780.99531.03011.00150.9525
SGI 1.04981.4111.74152.03472.28531.67761.33591.110.94450.9434
DEPI 1.05661.30320.8870.70870.65610.52510.74250.8960.99651.0063
SGAI 1.06261.95942.34962.46742.41441.2471.01770.91960.89160.9566
LVGI 1.42620.65480.65170.60070.55160.88530.92540.99081.02811.1589
TATA -0.0643-0.0292-0.0257-0.0596-0.0684-0.0462-0.05-0.055-0.0469-0.0625
M-score -3.08-1.15-1.24-1.38-1.40-2.69-2.76-2.93-2.77-2.68
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