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Health Net Inc (NYSE:HNT)
Beneish M-Score
-2.39 (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 -2.39 suggests that the company is not a manipulator.

HNT' s 10-Year Beneish M-Score Range
Min: -5.2   Max: -0.22
Current: -2.39

-5.2
-0.22

During the past 13 years, the highest Beneish M-Score of Health Net Inc was -0.22. The lowest was -5.20. 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 * 1.8063+0.528 * 0.9667+0.404 * 0.8072+0.892 * 1.1655+0.115 * 0.5623
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0488+4.679 * -0.1316-0.327 * 1.0871
=-2.39

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

This Year (Sep14) TTM:Last Year (Sep13) TTM:
Accounts Receivable was $723 Mil.
Revenue was 3789.87 + 3421.392 + 3038.935 + 2743.244 = $12,993 Mil.
Gross Profit was 561.457 + 525.005 + 504.619 + 389.203 = $1,980 Mil.
Total Current Assets was $4,088 Mil.
Total Assets was $4,963 Mil.
Property, Plant and Equipment(Net PPE) was $92 Mil.
Depreciation, Depletion and Amortization(DDA) was $36 Mil.
Selling, General & Admin. Expense(SGA) was $1,617 Mil.
Total Current Liabilities was $2,462 Mil.
Long-Term Debt was $499 Mil.
Net Income was -8.939 + 120.867 + 28.787 + 19.753 = $160 Mil.
Non Operating Income was 0 + 0 + 0 + 0 = $0 Mil.
Cash Flow from Operations was 587.955 + -13.75 + 311.458 + -71.886 = $814 Mil.
Accounts Receivable was $344 Mil.
Revenue was 2775.031 + 2738.431 + 2797.037 + 2837.782 = $11,148 Mil.
Gross Profit was 453.136 + 419.113 + 402.826 + 367.428 = $1,643 Mil.
Total Current Assets was $3,056 Mil.
Total Assets was $4,042 Mil.
Property, Plant and Equipment(Net PPE) was $196 Mil.
Depreciation, Depletion and Amortization(DDA) was $37 Mil.
Selling, General & Admin. Expense(SGA) was $1,322 Mil.
Total Current Liabilities was $1,720 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)
=(723.177 / 12993.441) / (343.502 / 11148.281)
=0.05565708 / 0.0308121
=1.8063

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)
=(525.005 / 11148.281) / (561.457 / 12993.441)
=0.1473324 / 0.15240643
=0.9667

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 - (4088.434 + 92.193) / 4962.904) / (1 - (3056.32 + 195.954) / 4041.501)
=0.15762485 / 0.19528066
=0.8072

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
=12993.441 / 11148.281
=1.1655

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))
=(36.779 / (36.779 + 195.954)) / (36.038 / (36.038 + 92.193))
=0.15803088 / 0.28103969
=0.5623

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)
=(1616.584 / 12993.441) / (1322.438 / 11148.281)
=0.12441539 / 0.11862259
=1.0488

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)
=((499.453 + 2462.434) / 4962.904) / ((499.248 + 1719.512) / 4041.501)
=0.59680522 / 0.54899405
=1.0871

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
=(160.468 - 0 - 813.777) / 4962.904
=-0.1316

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 -2.39 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 0.6911.00223.19830.19731.1661.09771.17882.09840.47440.868
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 -2.34-2.57-0.27-4.14-1.12-2.75-2.47-1.52-2.83-2.59

Health Net Inc Quarterly Data

Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14
DSRI 1.16151.56430.47443.0031.63931.10630.8680.6171.36491.8063
GMI 1.02831.1331.20121.11520.95140.84060.79330.81080.88110.9667
AQI 0.82280.89380.80511.04641.09891.06731.15460.95430.79680.8072
SGI 0.90180.9640.98891.03431.00730.9990.97921.00351.0741.1655
DEPI 1.44831.38141.21831.10.94480.92130.90120.9470.9970.5623
SGAI 1.03030.99530.96361.06191.11721.12271.09921.16621.08021.0488
LVGI 1.0320.93721.01590.93980.98271.02360.97291.04521.03331.0871
TATA -0.06640.09060.02840.05120.0859-0.02210.0189-0.0647-0.0611-0.1316
M-score -2.75-1.48-2.79-0.27-1.49-2.58-2.60-3.30-2.53-2.39
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