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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.
During the past 13 years, the highest Beneish M-Score of Express Scripts Holding Co was 2.37. The lowest was -3.09. And the median was -2.54.
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 * 1.1666||+||0.528 * 0.9475||+||0.404 * 0.9719||+||0.892 * 0.9955||+||0.115 * 0.9216|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9278||+||4.679 * -0.0539||-||0.327 * 1.2524|
|This Year (Mar16) TTM:||Last Year (Mar15) TTM:|
|Accounts Receivable was $6,758 Mil.|
Revenue was 24791.8 + 26175.4 + 25222.6 + 25454.2 = $101,644 Mil.
Gross Profit was 1847 + 2263.2 + 2173.5 + 2131.2 = $8,415 Mil.
Total Current Assets was $10,400 Mil.
Total Assets was $51,108 Mil.
Property, Plant and Equipment(Net PPE) was $1,260 Mil.
Depreciation, Depletion and Amortization(DDA) was $2,328 Mil.
Selling, General & Admin. Expense(SGA) was $3,961 Mil.
Total Current Liabilities was $17,237 Mil.
Long-Term Debt was $14,383 Mil.
Net Income was 526.1 + 773.5 + 661.7 + 600.1 = $2,561 Mil.
Non Operating Income was 0 + 0 + 0 + 0 = $0 Mil.
Cash Flow from Operations was 751.2 + 2874 + 793 + 899.9 = $5,318 Mil.
|Accounts Receivable was $5,819 Mil.
Revenue was 24899.6 + 26312.6 + 25778.5 + 25111 = $102,102 Mil.
Gross Profit was 1834 + 2094 + 2073 + 2007.7 = $8,009 Mil.
Total Current Assets was $9,172 Mil.
Total Assets was $51,905 Mil.
Property, Plant and Equipment(Net PPE) was $1,510 Mil.
Depreciation, Depletion and Amortization(DDA) was $2,247 Mil.
Selling, General & Admin. Expense(SGA) was $4,289 Mil.
Total Current Liabilities was $14,900 Mil.
Long-Term Debt was $10,741 Mil.
1. DSRI = Days Sales in Receivables Index
A large increase in DSR could be indicative of revenue inflation.
|DSRI||=||(Receivables_t / Revenue_t)||/||(Receivables_t-1 / Revenue_t-1)|
|=||(6758.4 / 101644)||/||(5819.4 / 102101.7)|
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.
|=||(GrossProfit_t-1 / Revenue_t-1)||/||(GrossProfit_t / Revenue_t)|
|=||(2263.2 / 102101.7)||/||(1847 / 101644)|
3. AQI = Asset Quality Index
AQI is the ratio of asset quality in year t to year t-1.
|AQI||=||(1 - (CurrentAssets_t + PPE_t) / TotalAssets_t)||/||(1 - (CurrentAssets_t-1 + PPE_t-1) / TotalAssets_t-1)|
|=||(1 - (10399.8 + 1259.7) / 51107.6)||/||(1 - (9171.5 + 1510.2) / 51905.1)|
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.
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))|
|=||(2246.5 / (2246.5 + 1510.2))||/||(2327.7 / (2327.7 + 1259.7))|
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)|
|=||(3961.4 / 101644)||/||(4288.9 / 102101.7)|
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)|
|=||((14382.7 + 17236.9) / 51107.6)||/||((10741.2 + 14900.2) / 51905.1)|
8. TATA = Total Accruals to Total Assets
Total accruals calculated as the change in working capital accounts other than cash less depreciation.
|=||(NetIncome_t - NonOperatingIncome_t||-||CashFlowsfromOperations_t)||/||TotalAssets_t|
|=||(2561.4 - 0||-||5318.1)||/||51107.6|
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 -2.70 suggests that the company will not be a manipulator.
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
Express Scripts Holding Co Annual Data
Express Scripts Holding Co Quarterly Data