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Health Net Inc (NYSE:HNT)
Beneish M-Score
-2.53 (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 -2.53 suggests that the company is not a manipulator.

HNT' s 10-Year Beneish M-Score Range
Min: -5.63   Max: -0.41
Current: -2.53

-5.63
-0.41

During the past 13 years, the highest Beneish M-Score of Health Net Inc was -0.41. The lowest was -5.63. And the median was -2.50.


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 * 1.3643+0.528 * 0.8811+0.404 * 0.7968+0.892 * 1.074+0.115 * 0.997
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0802+4.679 * -0.0611-0.327 * 1.0333
=-2.53

* 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 $1,226 Mil.
Revenue was 3421.392 + 3038.935 + 2743.244 + 2775.031 = $11,979 Mil.
Gross Profit was 525.005 + 504.619 + 389.203 + 453.136 = $1,872 Mil.
Total Current Assets was $3,839 Mil.
Total Assets was $4,777 Mil.
Property, Plant and Equipment(Net PPE) was $209 Mil.
Depreciation, Depletion and Amortization(DDA) was $39 Mil.
Selling, General & Admin. Expense(SGA) was $1,504 Mil.
Total Current Liabilities was $2,210 Mil.
Long-Term Debt was $499 Mil.
Net Income was 120.867 + 28.787 + 19.753 + 66.84 = $236 Mil.
Non Operating Income was 0 + 0 + 0 + 0 = $0 Mil.
Cash Flow from Operations was -13.75 + 311.458 + -71.886 + 302.195 = $528 Mil.
Accounts Receivable was $837 Mil.
Revenue was 2738.431 + 2797.037 + 2837.782 + 2779.572 = $11,153 Mil.
Gross Profit was 419.113 + 402.826 + 367.428 + 346.369 = $1,536 Mil.
Total Current Assets was $2,948 Mil.
Total Assets was $3,881 Mil.
Property, Plant and Equipment(Net PPE) was $190 Mil.
Depreciation, Depletion and Amortization(DDA) was $35 Mil.
Selling, General & Admin. Expense(SGA) was $1,296 Mil.
Total Current Liabilities was $1,606 Mil.
Long-Term Debt was $524 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)
=(1225.927 / 11978.602) / (836.657 / 11152.822)
=0.10234308 / 0.07501752
=1.3643

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)
=(504.619 / 11152.822) / (525.005 / 11978.602)
=0.13769932 / 0.15627558
=0.8811

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 - (3839.138 + 209.385) / 4777.025) / (1 - (2948.138 + 190.394) / 3881.453)
=0.15250119 / 0.19140281
=0.7968

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
=11978.602 / 11152.822
=1.074

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))
=(35.284 / (35.284 + 190.394)) / (38.94 / (38.94 + 209.385))
=0.15634665 / 0.15681063
=0.997

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)
=(1504.031 / 11978.602) / (1296.322 / 11152.822)
=0.12555981 / 0.11623264
=1.0802

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)
=((499.402 + 2209.771) / 4777.025) / ((524.197 + 1606.169) / 3881.453)
=0.56712556 / 0.54885786
=1.0333

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
=(236.247 - 0 - 528.017) / 4777.025
=-0.0611

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 -2.53 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.

Health Net Inc Annual Data

Dec04Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13
DSRI 1.43331.13751.35850.82451.27760.84291.24040.82931.01660.9892
GMI 1.41810.77970.91120.51222.48920.95230.98650.9181.18420.8047
AQI 1.00270.85780.94210.98861.03950.95360.89351.16970.80511.1546
SGI 1.05261.02531.08111.0931.08921.02260.83470.87040.98890.9792
DEPI 1.21530.91561.45950.74680.84890.79431.34721.20861.21830.9012
SGAI 0.93561.01841.10732.53670.38771.0020.78991.32850.99681.0626
LVGI 1.01010.9140.86871.16551.03970.95310.98160.96081.01590.9729
TATA 0.02670.00970.0239-0.08350.0527-0.0692-0.00790.01190.02280.0189
M-score -1.66-2.44-1.96-3.56-1.02-2.98-2.41-2.69-2.33-2.47

Health Net Inc Quarterly Data

Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14
DSRI 0.97581.09391.21181.01660.88961.01480.79870.98920.87041.3643
GMI 0.93051.02831.1331.20121.11520.95140.84060.79330.81080.8811
AQI 0.90260.82280.89380.80511.04641.09891.06731.15460.95430.7968
SGI 0.83310.90180.9640.98891.03431.00730.9990.97921.00351.074
DEPI 1.28951.44831.38141.21831.10.94480.92130.90120.9470.997
SGAI 1.00161.03030.99530.96361.06191.11721.12271.09921.16621.0802
LVGI 0.99331.0320.93721.01590.93980.98271.02360.97291.04521.0333
TATA -0.017-0.06380.09810.02840.05120.0859-0.02210.0189-0.0647-0.0611
M-score -2.77-2.80-1.77-2.29-2.21-2.06-2.86-2.49-3.07-2.53
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