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GuruFocus has detected 1 Warning Sign with Express Scripts Holding Co $ESRX.
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Express Scripts Holding Co (NAS:ESRX)
Beneish M-Score
-2.62 (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.

Express Scripts Holding Co has a M-score of -2.62 suggests that the company is not a manipulator.

ESRX' s Beneish M-Score Range Over the Past 10 Years
Min: -3.09   Max: 2.37
Current: -2.62

-3.09
2.37

During the past 13 years, the highest Beneish M-Score of Express Scripts Holding Co was 2.37. The lowest was -3.09. And the median was -2.51.


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 Express Scripts Holding Co 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 * 1.0416+0.528 * 0.9589+0.404 * 0.9564+0.892 * 0.9853+0.115 * 1.0484
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.8825+4.679 * -0.0342-0.327 * 0.9797
=-2.62

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

This Year (Mar17) TTM:Last Year (Mar16) TTM:
Accounts Receivable was $6,936 Mil.
Revenue was 24654.9 + 24863.3 + 25410.1 + 25222.3 = $100,151 Mil.
Gross Profit was 1872.7 + 2338.2 + 2274.1 + 2161.2 = $8,646 Mil.
Total Current Assets was $12,089 Mil.
Total Assets was $51,056 Mil.
Property, Plant and Equipment(Net PPE) was $1,278 Mil.
Depreciation, Depletion and Amortization(DDA) was $2,075 Mil.
Selling, General & Admin. Expense(SGA) was $3,445 Mil.
Total Current Liabilities was $17,042 Mil.
Long-Term Debt was $13,906 Mil.
Net Income was 546.3 + 1434.7 + 722.9 + 720.7 = $3,425 Mil.
Non Operating Income was 0 + 0 + 0 + 0 = $0 Mil.
Cash Flow from Operations was 1000.4 + 2248.9 + 1480.4 + 438.9 = $5,169 Mil.
Accounts Receivable was $6,758 Mil.
Revenue was 24791.8 + 26175.4 + 25222.6 + 25454.2 = $101,644 Mil.
Gross Profit was 1847 + 2263.2 + 2173.5 + 2131.2 = $8,415 Mil.
Total Current Assets was $10,400 Mil.
Total Assets was $51,108 Mil.
Property, Plant and Equipment(Net PPE) was $1,260 Mil.
Depreciation, Depletion and Amortization(DDA) was $2,328 Mil.
Selling, General & Admin. Expense(SGA) was $3,961 Mil.
Total Current Liabilities was $17,237 Mil.
Long-Term Debt was $14,383 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)
=(6936.1 / 100150.6) / (6758.4 / 101644)
=0.0692567 / 0.06649089
=1.0416

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)
=(8414.9 / 101644) / (8646.2 / 100150.6)
=0.08278797 / 0.08633198
=0.9589

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 - (12089.2 + 1277.8) / 51056) / (1 - (10399.8 + 1259.7) / 51107.6)
=0.73818944 / 0.77186368
=0.9564

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
=100150.6 / 101644
=0.9853

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))
=(2327.7 / (2327.7 + 1259.7)) / (2074.9 / (2074.9 + 1277.8))
=0.64885432 / 0.61887434
=1.0484

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)
=(3444.6 / 100150.6) / (3961.4 / 101644)
=0.0343942 / 0.03897328
=0.8825

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)
=((13906.2 + 17041.7) / 51056) / ((14382.7 + 17236.9) / 51107.6)
=0.60615599 / 0.61868685
=0.9797

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
=(3424.6 - 0 - 5168.6) / 51056
=-0.0342

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.

Express Scripts Holding Co has a M-score of -2.62 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.

Express Scripts Holding Co Annual Data

Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15Dec16
DSRI 0.88450.87711.78420.3761.08531.39340.66781.53381.11441.066
GMI 0.87060.95541.02891.49110.94530.89140.99930.99450.95130.9606
AQI 0.95171.00691.05931.10020.66611.72161.030.95490.96810.9829
SGI 1.0361.11251.22021.81861.02572.03271.11020.96911.00860.9856
DEPI 1.07581.021.29890.59321.04730.70850.89631.01690.90691.0283
SGAI 1.02970.99080.99420.52590.9842.48630.91160.97370.93180.8823
LVGI 1.11240.91510.90360.91141.32260.60070.99081.08891.12211.0347
TATA -0.0456-0.0589-0.0791-0.0887-0.0588-0.0599-0.0544-0.0473-0.0445-0.0293
M-score -2.89-2.76-1.83-2.38-2.91-1.40-2.92-2.28-2.65-2.58

Express Scripts Holding Co Quarterly Data

Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16Dec16Mar17
DSRI 1.53381.48441.23031.14021.11441.16661.14690.94531.0661.0416
GMI 0.99450.99230.97940.97330.95130.94750.95330.96070.96060.9589
AQI 0.95490.97531.01080.98590.96810.97190.97430.97460.98290.9564
SGI 0.96911.00331.01941.01531.00860.99550.98990.99720.98560.9853
DEPI 1.01690.98860.9530.91970.90690.92160.95420.98671.02831.0484
SGAI 0.97370.94930.93930.93140.93180.92780.92030.89550.88230.8825
LVGI 1.08891.05411.13951.12871.12211.25241.03751.05031.03470.9797
TATA -0.0473-0.0435-0.045-0.0503-0.0445-0.0539-0.0428-0.055-0.0293-0.0342
M-score -2.28-2.26-2.51-2.63-2.65-2.70-2.59-2.82-2.58-2.62
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