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Health Net Inc (NYSE:HNT)
Beneish M-Score
-3.40 (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 -3.40 suggests that the company is not a manipulator.

HNT' s 10-Year Beneish M-Score Range
Min: -4.16   Max: -0.22
Current: -3.4

-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 -2.52.


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 * 0.6122+0.528 * 0.9746+0.404 * 0.7175+0.892 * 1.2673+0.115 * 0.616
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0822+4.679 * -0.1168-0.327 * 1.2077
=-3.40

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

This Year (Dec14) TTM:Last Year (Dec13) TTM:
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.
Net Income was 4.914 + -8.939 + 120.867 + 28.787 = $146 Mil.
Non Operating Income was 0 + 0 + 0 + 0 = $0 Mil.
Cash Flow from Operations was -109.662 + 587.955 + -13.75 + 311.458 = $776 Mil.
Accounts Receivable was $194 Mil.
Revenue was 2743.244 + 2775.031 + 2738.431 + 2797.037 = $11,054 Mil.
Gross Profit was 389.203 + 453.136 + 419.113 + 402.826 = $1,664 Mil.
Total Current Assets was $2,920 Mil.
Total Assets was $3,929 Mil.
Property, Plant and Equipment(Net PPE) was $201 Mil.
Depreciation, Depletion and Amortization(DDA) was $39 Mil.
Selling, General & Admin. Expense(SGA) was $1,323 Mil.
Total Current Liabilities was $1,577 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)
=(150.546 / 14008.586) / (194.041 / 11053.743)
=0.01074669 / 0.01755433
=0.6122

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)
=(561.457 / 11053.743) / (573.111 / 14008.586)
=0.15056239 / 0.1544904
=0.9746

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 - (4515.617 + 84.328) / 5395.934) / (1 - (2919.89 + 201.395) / 3929.125)
=0.14751644 / 0.20560303
=0.7175

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
=14008.586 / 11053.743
=1.2673

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))
=(38.589 / (38.589 + 201.395)) / (29.786 / (29.786 + 84.328))
=0.16079822 / 0.26101968
=0.616

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)
=(1814.702 / 14008.586) / (1323.122 / 11053.743)
=0.12954213 / 0.119699
=1.0822

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)
=((499.504 + 2944.503) / 5395.934) / ((499.3 + 1577.178) / 3929.125)
=0.63825966 / 0.52848357
=1.2077

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
=(145.629 - 0 - 776.001) / 5395.934
=-0.1168

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 -3.40 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 1.00223.19830.19731.1661.09771.17882.09840.47440.8680.6122
GMI 0.77970.91120.51222.48920.95230.98650.9181.18420.80470.9746
AQI 0.85780.94210.98861.03950.95360.89351.16970.80511.15460.7175
SGI 1.02531.08111.0931.08921.02260.83470.87040.98890.97921.2673
DEPI 0.91561.45950.74680.84890.79431.34721.20861.21830.90120.616
SGAI 1.01841.10732.53670.38771.0020.78991.32850.99681.06261.0822
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 -2.57-0.27-4.14-1.12-2.75-2.47-1.52-2.73-2.59-3.40

Health Net Inc Quarterly Data

Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14Dec14
DSRI 1.56430.47443.0031.63931.10630.8680.6171.36491.80630.6122
GMI 1.1331.20121.11520.95140.84060.79330.81080.88110.96670.9746
AQI 0.89380.80511.04641.09891.06731.15460.95430.79680.80720.7175
SGI 0.9640.98891.03431.00730.9990.97921.00351.0741.16551.2673
DEPI 1.38141.21831.10.94480.92130.90120.9470.9970.56230.616
SGAI 0.99530.96361.06191.11721.12271.09921.16621.08021.04881.0822
LVGI 0.93721.01590.93980.98271.02360.97291.04521.03331.08711.2077
TATA 0.09060.04940.07250.1071-0.00170.0189-0.0647-0.0611-0.1316-0.1168
M-score -1.48-2.69-0.17-1.39-2.49-2.60-3.30-2.53-2.39-3.40
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