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Health Net Inc (NYSE:HNT)
Beneish M-Score
-3.36 (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 -3.36 suggests that the company is not a manipulator.

HNT' s 10-Year Beneish M-Score Range
Min: -6.02   Max: -0.17
Current: -3.36

-6.02
-0.17

During the past 13 years, the highest Beneish M-Score of Health Net Inc was -0.17. The lowest was -6.02. And the median was -2.53.


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 * 0.8923+0.528 * 1.0262+0.404 * 0.8782+0.892 * 1.3155+0.115 * 0.7031
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0062+4.679 * -0.2004-0.327 * 1.1712
=-3.36

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

This Year (Mar15) TTM:Last Year (Mar14) TTM:
Accounts Receivable was $529 Mil.
Revenue was 3889.896 + 3758.389 + 3789.87 + 3421.392 = $14,860 Mil.
Gross Profit was 604.493 + 573.111 + 561.457 + 525.005 = $2,264 Mil.
Total Current Assets was $4,888 Mil.
Total Assets was $5,880 Mil.
Property, Plant and Equipment(Net PPE) was $84 Mil.
Depreciation, Depletion and Amortization(DDA) was $24 Mil.
Selling, General & Admin. Expense(SGA) was $1,912 Mil.
Total Current Liabilities was $3,336 Mil.
Long-Term Debt was $595 Mil.
Net Income was 29.988 + 4.914 + -8.939 + 120.867 = $147 Mil.
Non Operating Income was 0 + 0 + 0 + 0 = $0 Mil.
Cash Flow from Operations was 860.618 + -109.662 + 587.955 + -13.75 = $1,325 Mil.
Accounts Receivable was $450 Mil.
Revenue was 3038.935 + 2743.244 + 2775.031 + 2738.431 = $11,296 Mil.
Gross Profit was 504.619 + 389.203 + 453.136 + 419.113 = $1,766 Mil.
Total Current Assets was $3,445 Mil.
Total Assets was $4,431 Mil.
Property, Plant and Equipment(Net PPE) was $206 Mil.
Depreciation, Depletion and Amortization(DDA) was $39 Mil.
Selling, General & Admin. Expense(SGA) was $1,445 Mil.
Total Current Liabilities was $2,029 Mil.
Long-Term Debt was $499 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)
=(528.513 / 14859.547) / (450.224 / 11295.641)
=0.03556723 / 0.03985821
=0.8923

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)
=(573.111 / 11295.641) / (604.493 / 14859.547)
=0.15634978 / 0.1523644
=1.0262

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 - (4888.199 + 84.095) / 5880.03) / (1 - (3445.374 + 206.41) / 4430.619)
=0.15437608 / 0.17578469
=0.8782

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
=14859.547 / 11295.641
=1.3155

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))
=(38.813 / (38.813 + 206.41)) / (24.43 / (24.43 + 84.095))
=0.15827634 / 0.22510942
=0.7031

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)
=(1912.071 / 14859.547) / (1444.501 / 11295.641)
=0.12867626 / 0.12788128
=1.0062

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)
=((594.556 + 3335.66) / 5880.03) / ((499.351 + 2029.189) / 4430.619)
=0.66840067 / 0.57069678
=1.1712

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
=(146.83 - 0 - 1325.161) / 5880.03
=-0.2004

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 -3.36 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

Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14
DSRI 1.00223.19830.19731.1661.09772.40851.0270.47440.8680.6122
GMI 0.77970.91120.51222.48920.95230.96040.94291.18420.80470.9746
AQI 0.85780.94210.98861.03950.95350.89351.16970.80511.15460.7175
SGI 1.02531.08111.0931.08921.02260.86680.83810.98890.97921.2673
DEPI 0.91561.45950.74680.84890.79441.30451.24811.21830.90120.616
SGAI 1.01841.10732.53670.38771.0021.00531.04390.99681.06261.0822
LVGI 0.9140.86871.16551.03970.95310.98160.96081.01590.97291.2077
TATA 0.00970.0239-0.08350.0527-0.0692-0.00790.01190.04370.0189-0.1168
M-score -2.57-0.27-4.14-1.12-2.75-1.36-2.47-2.73-2.59-3.40

Health Net Inc Quarterly Data

Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14Dec14Mar15
DSRI 0.47443.0031.63931.10630.8680.6171.36491.80630.61220.8923
GMI 1.20121.11520.95140.84060.79330.81080.88110.96670.97461.0262
AQI 0.80511.04641.09891.06731.15460.95430.79680.80720.71750.8782
SGI 0.98891.03431.00730.9990.97921.00351.0741.16551.26731.3155
DEPI 1.21831.10.94480.92130.90120.9470.9970.56230.6160.7031
SGAI 0.96361.06191.11721.12271.09921.16621.08021.04881.08221.0062
LVGI 1.01590.93980.98271.02360.97291.04521.03331.08711.20771.1712
TATA 0.04940.07250.1071-0.00170.0189-0.0647-0.0611-0.1316-0.1168-0.2004
M-score -2.69-0.17-1.39-2.49-2.60-3.30-2.53-2.39-3.40-3.36
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