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Health Net Inc (NYSE:HNT)
Beneish M-Score
-1.96 (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.

Health Net Inc has a M-score of -1.96 signals that the company is a manipulator.

HNT' s Beneish M-Score Range Over the Past 10 Years
Min: -4.16   Max: -0.22
Current: -1.96

-4.16
-0.22

During the past 13 years, the highest Beneish M-Score of Health Net Inc was -0.22. The lowest was -4.16. And the median was -2.45.


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 Health Net 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 * 1.5333+0.528 * 0.9657+0.404 * 0.9828+0.892 * 1.1595+0.115 * 1.9529
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9915+4.679 * -0.0401-0.327 * 1.0461
=-1.96

* 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 $268 Mil.
Revenue was 4036.401 + 4153.667 + 4163.623 + 3889.896 = $16,244 Mil.
Gross Profit was 654.47 + 677.128 + 662.619 + 604.493 = $2,599 Mil.
Total Current Assets was $5,324 Mil.
Total Assets was $6,398 Mil.
Property, Plant and Equipment(Net PPE) was $146 Mil.
Depreciation, Depletion and Amortization(DDA) was $23 Mil.
Selling, General & Admin. Expense(SGA) was $2,086 Mil.
Total Current Liabilities was $3,872 Mil.
Long-Term Debt was $400 Mil.
Net Income was 37.068 + 60.253 + 58.368 + 29.988 = $186 Mil.
Non Operating Income was 41.696 + -13.915 + -16.424 + 0 = $11 Mil.
Cash Flow from Operations was -138.567 + -30.681 + -260.275 + 860.618 = $431 Mil.
Accounts Receivable was $151 Mil.
Revenue was 3758.389 + 3789.87 + 3421.392 + 3038.935 = $14,009 Mil.
Gross Profit was 573.111 + 561.457 + 525.005 + 504.619 = $2,164 Mil.
Total Current Assets was $4,516 Mil.
Total Assets was $5,396 Mil.
Property, Plant and Equipment(Net PPE) was $84 Mil.
Depreciation, Depletion and Amortization(DDA) was $30 Mil.
Selling, General & Admin. Expense(SGA) was $1,815 Mil.
Total Current Liabilities was $2,945 Mil.
Long-Term Debt was $500 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)
=(267.655 / 16243.587) / (150.546 / 14008.586)
=0.01647758 / 0.01074669
=1.5333

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)
=(677.128 / 14008.586) / (654.47 / 16243.587)
=0.1544904 / 0.15998375
=0.9657

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 - (5324.043 + 146.053) / 6397.646) / (1 - (4515.617 + 84.328) / 5395.934)
=0.14498301 / 0.14751644
=0.9828

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
=16243.587 / 14008.586
=1.1595

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))
=(29.786 / (29.786 + 84.328)) / (22.533 / (22.533 + 146.053))
=0.26101968 / 0.13365879
=1.9529

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)
=(2086.34 / 16243.587) / (1814.702 / 14008.586)
=0.12844084 / 0.12954213
=0.9915

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)
=((399.709 + 3871.91) / 6397.646) / ((499.504 + 2944.503) / 5395.934)
=0.66768605 / 0.63825966
=1.0461

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
=(185.677 - 11.357 - 431.095) / 6397.646
=-0.0401

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 Net Inc has a M-score of -1.96 signals that the company is likely to 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.

Health Net Inc Annual Data

Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15
DSRI 3.19830.19731.1661.09772.50110.9890.47440.8680.61221.5333
GMI 0.91120.51222.48920.95230.98650.9181.18420.80470.97460.9657
AQI 0.94210.98861.03950.95350.89351.16970.80511.15460.71750.9828
SGI 1.08111.0931.08921.02260.83470.87040.98890.97921.26731.1595
DEPI 1.45950.74680.84890.79441.34711.20861.21830.90120.6161.9529
SGAI 1.10732.53670.38771.0020.78991.49690.88471.06261.08220.9915
LVGI 0.86871.16551.03970.95310.98160.96081.01590.97291.20771.0461
TATA 0.0239-0.08350.0527-0.0692-0.00790.01190.02280.0366-0.1004-0.0381
M-score -0.27-4.14-1.12-2.75-1.25-2.57-2.81-2.50-3.32-1.95

Health Net Inc Quarterly Data

Sep13Dec13Mar14Jun14Sep14Dec14Mar15Jun15Sep15Dec15
DSRI 1.10630.8680.6171.36491.80630.61220.89230.59431.1231.5333
GMI 0.84060.79330.81080.88110.96670.97461.02621.01520.96660.9657
AQI 1.06731.15460.95430.79680.80720.71750.87821.02950.92190.9828
SGI 0.9990.97921.00351.0741.16551.26731.31551.30251.22871.1595
DEPI 0.92130.90120.9470.9970.56230.6160.70310.82412.29871.9529
SGAI 0.9861.09921.16621.08021.04881.08221.00621.03181.05220.9915
LVGI 1.02360.97291.04521.03331.08711.20771.17121.14371.10091.0461
TATA -0.02210.0366-0.049-0.044-0.113-0.1025-0.1872-0.1557-0.0368-0.0401
M-score -2.56-2.51-3.23-2.45-2.30-3.33-3.30-3.36-2.28-1.96
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