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Humana Inc (NYSE:HUM)
Beneish M-Score
-3.22 (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.

Humana Inc has a M-score of -3.22 suggests that the company is not a manipulator.

HUM' s Beneish M-Score Range Over the Past 10 Years
Min: -5.14   Max: 0.09
Current: -3.22

-5.14
0.09

During the past 13 years, the highest Beneish M-Score of Humana Inc was 0.09. The lowest was -5.14. 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 Humana 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 * 0.7531+0.528 * 1+0.404 * 1.0054+0.892 * 1.0302+0.115 * 1.0731
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.913+4.679 * -0.1341-0.327 * 0.8181
=-3.22

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

This Year (Sep16) TTM:Last Year (Sep15) TTM:
Accounts Receivable was $765 Mil.
Revenue was 13694 + 14007 + 13800 + 13361 = $54,862 Mil.
Gross Profit was 13694 + 14007 + 13800 + 13361 = $54,862 Mil.
Total Current Assets was $0 Mil.
Total Assets was $29,466 Mil.
Property, Plant and Equipment(Net PPE) was $1,478 Mil.
Depreciation, Depletion and Amortization(DDA) was $460 Mil.
Selling, General & Admin. Expense(SGA) was $7,121 Mil.
Total Current Liabilities was $0 Mil.
Long-Term Debt was $3,792 Mil.
Net Income was 450 + 311 + 234 + 101 = $1,096 Mil.
Non Operating Income was 0 + 0 + 0 + 0 = $0 Mil.
Cash Flow from Operations was 4503 + -276 + 482 + 337 = $5,046 Mil.
Accounts Receivable was $986 Mil.
Revenue was 13363 + 13732 + 13833 + 12328 = $53,256 Mil.
Gross Profit was 13363 + 13732 + 13833 + 12328 = $53,256 Mil.
Total Current Assets was $0 Mil.
Total Assets was $24,296 Mil.
Property, Plant and Equipment(Net PPE) was $1,343 Mil.
Depreciation, Depletion and Amortization(DDA) was $459 Mil.
Selling, General & Admin. Expense(SGA) was $7,571 Mil.
Total Current Liabilities was $0 Mil.
Long-Term Debt was $3,822 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)
=(765 / 54862) / (986 / 53256)
=0.01394408 / 0.01851435
=0.7531

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)
=(53256 / 53256) / (54862 / 54862)
=1 / 1
=1

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 - (0 + 1478) / 29466) / (1 - (0 + 1343) / 24296)
=0.94984049 / 0.94472341
=1.0054

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
=54862 / 53256
=1.0302

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))
=(459 / (459 + 1343)) / (460 / (460 + 1478))
=0.25471698 / 0.2373581
=1.0731

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)
=(7121 / 54862) / (7571 / 53256)
=0.1297984 / 0.14216239
=0.913

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)
=((3792 + 0) / 29466) / ((3822 + 0) / 24296)
=0.12869069 / 0.15730985
=0.8181

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
=(1096 - 0 - 5046) / 29466
=-0.1341

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.

Humana Inc has a M-score of -3.22 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 local exchange's currency.

Humana Inc Annual Data

Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15
DSRI
GMI
AQI
SGI
DEPI
SGAI
LVGI
TATA
M-score

Humana Inc Quarterly Data

Jun14Sep14Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16
DSRI 1.17231.06930.94420.97270.87510.85490.9850.9591.14640.7531
GMI 1111111111
AQI 0.99851.00111.0071.00641.00481.00020.99590.99620.99771.0054
SGI 1.11061.13951.1741.191.17311.14881.11941.07181.0461.0302
DEPI 1.00671.0540.96780.96720.95540.96391.09671.10931.11241.0731
SGAI 1.0661.0681.02390.97910.93850.88750.85580.85430.86620.913
LVGI 0.89791.26281.29661.29621.34191.00040.94560.94370.92470.8181
TATA -0.0239-0.018-0.020.0060.02560.02450.0165-0.0061-0.0226-0.1341
M-score -2.31-2.47-2.57-2.40-2.43-2.35-2.26-2.43-2.35-3.22
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