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GuruFocus has detected 3 Warning Signs with Unum Group $UNM.
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Unum Group (NYSE:UNM)
Beneish M-Score
-2.55 (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.

Unum Group has a M-score of -2.55 suggests that the company is not a manipulator.

UNM' s Beneish M-Score Range Over the Past 10 Years
Min: -3.57   Max: -2.46
Current: -2.55

-3.57
-2.46

During the past 13 years, the highest Beneish M-Score of Unum Group was -2.46. The lowest was -3.57. And the median was -2.55.


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 Unum Group 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 * 0.9915+0.528 * 1+0.404 * 1.0003+0.892 * 1.0294+0.115 * 0.9662
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9924+4.679 * -0.0029-0.327 * 1.2111
=-2.55

* 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 $1,695 Mil.
Revenue was 2806.5 + 2796.5 + 2763.3 + 2761.3 = $11,128 Mil.
Gross Profit was 2806.5 + 2796.5 + 2763.3 + 2761.3 = $11,128 Mil.
Total Current Assets was $0 Mil.
Total Assets was $62,525 Mil.
Property, Plant and Equipment(Net PPE) was $501 Mil.
Depreciation, Depletion and Amortization(DDA) was $103 Mil.
Selling, General & Admin. Expense(SGA) was $1,869 Mil.
Total Current Liabilities was $0 Mil.
Long-Term Debt was $2,985 Mil.
Net Income was 229.9 + 248 + 236 + 236.8 = $951 Mil.
Non Operating Income was 0 + 0 + 0 + 0 = $0 Mil.
Cash Flow from Operations was 308 + 361.2 + 193.5 + 268.1 = $1,131 Mil.
Accounts Receivable was $1,661 Mil.
Revenue was 2725.4 + 2722.4 + 2657.8 + 2703.7 = $10,809 Mil.
Gross Profit was 2725.4 + 2722.4 + 2657.8 + 2703.7 = $10,809 Mil.
Total Current Assets was $0 Mil.
Total Assets was $61,968 Mil.
Property, Plant and Equipment(Net PPE) was $515 Mil.
Depreciation, Depletion and Amortization(DDA) was $101 Mil.
Selling, General & Admin. Expense(SGA) was $1,829 Mil.
Total Current Liabilities was $0 Mil.
Long-Term Debt was $2,443 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)
=(1695.4 / 11127.6) / (1661 / 10809.3)
=0.1523599 / 0.15366397
=0.9915

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)
=(10809.3 / 10809.3) / (11127.6 / 11127.6)
=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 + 501.2) / 62524.7) / (1 - (0 + 515.2) / 61967.9)
=0.99198397 / 0.99168602
=1.0003

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
=11127.6 / 10809.3
=1.0294

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))
=(101.4 / (101.4 + 515.2)) / (102.8 / (102.8 + 501.2))
=0.16445021 / 0.17019868
=0.9662

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)
=(1868.5 / 11127.6) / (1828.9 / 10809.3)
=0.16791581 / 0.1691969
=0.9924

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)
=((2984.6 + 0) / 62524.7) / ((2442.5 + 0) / 61967.9)
=0.04773474 / 0.03941557
=1.2111

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
=(950.7 - 0 - 1130.8) / 62524.7
=-0.0029

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.

Unum Group has a M-score of -2.55 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.

Unum Group Annual Data

Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15Dec16
DSRI 0.98240.96020.95190.99560.95431.05480.98870.91980.979
GMI 111111111
AQI 0.99921.00010.999811.00020.99941.00010.99991.0006
SGI 0.94891.01091.01011.00831.02310.9861.0151.01961.0294
DEPI 1.00051.00041.05330.96710.98131.01241.00180.88880.9453
SGAI 4.58971.60071.29211.02550.98721.01171.01781.02270.986
LVGI 0.9581.02360.98110.93991.02590.99320.95730.96081.1973
TATA -0.0156-0.0071-0.0054-0.0153-0.0078-0.0031-0.0132-0.007-0.003
M-score -3.22-2.65-2.58-2.54-2.55-2.46-2.53-2.57-2.56

Unum Group Quarterly Data

Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16Dec16Mar17
DSRI 0.98870.97680.99170.96250.91980.9790.97350.97320.9790.9915
GMI 1111111111
AQI 1.000110.999810.99991.00021.00071.00061.00061.0003
SGI 1.0151.01921.01841.01541.01961.02391.02481.03051.02941.0294
DEPI 1.00180.96910.93180.92120.88880.87710.89740.9240.94530.9662
SGAI 1.01781.03191.03641.03581.02270.99840.99070.98540.9860.9924
LVGI 0.95730.85590.9320.80250.96080.95411.13931.31091.19731.2111
TATA -0.0132-0.0141-0.0138-0.015-0.007-0.0052-0.0039-0.0022-0.003-0.0029
M-score -2.53-2.51-2.53-2.52-2.57-2.50-2.56-2.60-2.56-2.55
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