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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 Health Management Associates, Inc. was 0.00. The lowest was 0.00. And the median was 0.00.
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 Health Management Associates, 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 * 0.9874||+||0.528 * 1.0435||+||0.404 * 1.0197||+||0.892 * 1.0107||+||0.115 * 0.9059|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.3149||+||4.679 * -0.0447||-||0.327 * 0.9759|
* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.
|This Year (Sep13) TTM:||Last Year (Sep12) TTM:|
|Accounts Receivable was $970 Mil.|
Revenue was 1421.243 + 1461.707 + 1487.829 + 1471.911 = $5,843 Mil.
Gross Profit was 544.882 + 556.965 + 566.383 + 566.938 = $2,235 Mil.
Total Current Assets was $1,463 Mil.
Total Assets was $6,625 Mil.
Property, Plant and Equipment(Net PPE) was $3,591 Mil.
Depreciation, Depletion and Amortization(DDA) was $394 Mil.
Selling, General & Admin. Expense(SGA) was $184 Mil.
Total Current Liabilities was $852 Mil.
Long-Term Debt was $3,637 Mil.
Net Income was -96.645 + 0.16 + 23.688 + 35.75 = $-37 Mil.
Non Operating Income was 0 + 0 + 0 + 0 = $0 Mil.
Cash Flow from Operations was -7.254 + 108.221 + 19.241 + 139.208 = $259 Mil.
|Accounts Receivable was $972 Mil.
Revenue was 1438.859 + 1470.728 + 1484.007 + 1387.447 = $5,781 Mil.
Gross Profit was 584.735 + 598.641 + 591.327 + 533.16 = $2,308 Mil.
Total Current Assets was $1,424 Mil.
Total Assets was $6,307 Mil.
Property, Plant and Equipment(Net PPE) was $3,415 Mil.
Depreciation, Depletion and Amortization(DDA) was $336 Mil.
Selling, General & Admin. Expense(SGA) was $138 Mil.
Total Current Liabilities was $903 Mil.
Long-Term Debt was $3,476 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)|
|=||(970.132 / 5842.69)||/||(972.104 / 5781.041)|
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)|
|=||(556.965 / 5781.041)||/||(544.882 / 5842.69)|
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 - (1462.656 + 3590.832) / 6624.903)||/||(1 - (1424.201 + 3415.431) / 6306.728)|
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))|
|=||(336.396 / (336.396 + 3415.431))||/||(394.45 / (394.45 + 3590.832))|
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)|
|=||(183.584 / 5842.69)||/||(138.142 / 5781.041)|
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)|
|=||((3636.948 + 852.294) / 6624.903)||/||((3476.368 + 902.678) / 6306.728)|
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|
|=||(-37.047 - 0||-||259.416)||/||6624.903|
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.
Health Management Associates, Inc. has a M-score of -2.72 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
Health Management Associates, Inc. Annual Data
Health Management Associates, Inc. Quarterly Data