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Health Net Inc (NYSE:HNT)
Beneish M-Score
-3.04 (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 -3.04 suggests that the company is not a manipulator.

HNT' s 10-Year Beneish M-Score Range
Min: -5.64   Max: -0.41
Current: -3.04

-5.64
-0.41

During the past 13 years, the highest Beneish M-Score of Health Net Inc was -0.41. The lowest was -5.64. 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 * 0.8704+0.528 * 0.8217+0.404 * 0.9543+0.892 * 1.0035+0.115 * 0.947
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.1662+4.679 * -0.0608-0.327 * 1.0452
=-3.04

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

This Year (Mar14) TTM:Last Year (Mar13) TTM:
Accounts Receivable was $693 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.
Net Income was 28.787 + 19.753 + 66.84 + 33.483 = $149 Mil.
Non Operating Income was 0 + 0 + 0 + -17.143 = $-17 Mil.
Cash Flow from Operations was 311.458 + -71.886 + 302.195 + -106.285 = $435 Mil.
Accounts Receivable was $794 Mil.
Revenue was 2797.037 + 2837.782 + 2779.572 + 2841.339 = $11,256 Mil.
Gross Profit was 402.826 + 367.428 + 346.369 + 329.478 = $1,446 Mil.
Total Current Assets was $2,973 Mil.
Total Assets was $3,875 Mil.
Property, Plant and Equipment(Net PPE) was $188 Mil.
Depreciation, Depletion and Amortization(DDA) was $33 Mil.
Selling, General & Admin. Expense(SGA) was $1,234 Mil.
Total Current Liabilities was $1,617 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)
=(693.318 / 11295.641) / (793.698 / 11255.73)
=0.06137925 / 0.07051502
=0.8704

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)
=(389.203 / 11255.73) / (504.619 / 11295.641)
=0.12847687 / 0.15634978
=0.8217

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 - (3445.374 + 206.41) / 4430.619) / (1 - (2973.449 + 188.038) / 3875.307)
=0.17578469 / 0.18419702
=0.9543

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
=11295.641 / 11255.73
=1.0035

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))
=(33.155 / (33.155 + 188.038)) / (38.813 / (38.813 + 206.41))
=0.14989172 / 0.15827634
=0.947

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)
=(1444.501 / 11295.641) / (1234.262 / 11255.73)
=0.12788128 / 0.10965633
=1.1662

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)
=((499.351 + 2029.189) / 4430.619) / ((499.146 + 1616.879) / 3875.307)
=0.57069678 / 0.54602771
=1.0452

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
=(148.863 - -17.143 - 435.482) / 4430.619
=-0.0608

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 -3.04 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

Dec11Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14
DSRI 0.82930.97581.09391.21181.01660.88960.7660.79870.98920.8704
GMI 0.9180.93051.01491.11741.18421.10030.9640.85230.80470.8217
AQI 1.16970.90260.82280.89380.80511.04641.09891.06731.15460.9543
SGI 0.87040.83310.90180.9640.98891.03431.00730.9990.97921.0035
DEPI 1.20861.28951.44831.38141.21831.10.94480.92130.90120.947
SGAI 1.16751.00161.03030.99530.96361.06191.11721.12271.09921.1662
LVGI 0.96080.99331.0320.93721.01590.93980.98271.02360.97291.0452
TATA 0.0119-0.0197-0.05770.10460.03470.05760.0903-0.01790.0233-0.0608
M-score -2.66-2.78-2.78-1.74-2.27-2.19-2.27-2.84-2.46-3.04
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