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Note: Financial institutions were excluded from the sample in Beneish paper when calculating Beneish M-Score. Thus, the prediction might not fit banks and insurance companies.
The zones of discrimination for M-Score is as such:
An M-Score of equal or less than -1.78 suggests that the company is unlikely to be a manipulator.
An M-Score of greater than -1.78 signals that the company is likely to be a manipulator.
Good Sign:
Beneish M-Score -2.52 no higher than -1.78, which implies that the company is unlikely to be a manipulator.
The historical rank and industry rank for Unum Group's Beneish M-Score or its related term are showing as below:
During the past 13 years, the highest Beneish M-Score of Unum Group was -1.62. The lowest was -2.62. And the median was -2.54.
The M-score was created by Professor Messod Beneish. Instead of measuring the bankruptcy risk (Altman Z-Score) or business trend (Piotroski 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 * 0.927 | + | 0.528 * 1 | + | 0.404 * 0.9868 | + | 0.892 * 1.0362 | + | 0.115 * 1.0733 | |
- | 0.172 * SGAI | + | 4.679 * TATA | - | 0.327 * LVGI | |||||||
- | 0.172 * 1.0299 | + | 4.679 * -0.003133 | - | 0.327 * 0.9666 | |||||||
= | -2.52 |
* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD.
* For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.
This Year (Dec23) TTM: | Last Year (Dec22) TTM: |
Total Receivables was $10,652 Mil. Revenue was 3123.7 + 3069 + 3093.5 + 3022.5 = $12,309 Mil. Gross Profit was 3123.7 + 3069 + 3093.5 + 3022.5 = $12,309 Mil. Total Current Assets was $49,243 Mil. Total Assets was $63,255 Mil. Property, Plant and Equipment(Net PPE) was $485 Mil. Depreciation, Depletion and Amortization(DDA) was $109 Mil. Selling, General, & Admin. Expense(SGA) was $1,163 Mil. Total Current Liabilities was $190 Mil. Long-Term Debt & Capital Lease Obligation was $3,430 Mil. Net Income was 330.6 + 202 + 392.9 + 358.3 = $1,284 Mil. Non Operating Income was 68.6 + 71.6 + 71.1 + 67.9 = $279 Mil. Cash Flow from Operations was 343.5 + 395.1 + 313.6 + 150.6 = $1,203 Mil. |
Total Receivables was $11,090 Mil. Revenue was 2994 + 2946.9 + 2986.4 + 2951.8 = $11,879 Mil. Gross Profit was 2994 + 2946.9 + 2986.4 + 2951.8 = $11,879 Mil. Total Current Assets was $47,445 Mil. Total Assets was $61,149 Mil. Property, Plant and Equipment(Net PPE) was $452 Mil. Depreciation, Depletion and Amortization(DDA) was $111 Mil. Selling, General, & Admin. Expense(SGA) was $1,090 Mil. Total Current Liabilities was $193 Mil. Long-Term Debt & Capital Lease Obligation was $3,428 Mil. |
1. DSRI = Days Sales in Receivables Index
Measured as the ratio of Revenue in Total 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) |
= | (10652.1 / 12308.7) | / | (11090.1 / 11879.1) | |
= | 0.865412 | / | 0.933581 | |
= | 0.927 |
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) | |
= | (11879.1 / 11879.1) | / | (12308.7 / 12308.7) | |
= | 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 Property, Plant and Equipment to Total Assets.
AQI | = | (1 - (CurrentAssets_t + PPE_t) / TotalAssets_t) | / | (1 - (CurrentAssets_t-1 + PPE_t-1) / TotalAssets_t-1) |
= | (1 - (49242.7 + 485.3) / 63255.2) | / | (1 - (47444.9 + 451.7) / 61148.5) | |
= | 0.213851 | / | 0.216717 | |
= | 0.9868 |
4. SGI = Sales Growth Index
Ratio of Revenue 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 | |
= | 12308.7 | / | 11879.1 | |
= | 1.0362 |
5. DEPI = Depreciation Index
Measured as the ratio of the rate of Depreciation, Depletion and Amortization 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)) |
= | (110.5 / (110.5 + 451.7)) | / | (108.8 / (108.8 + 485.3)) | |
= | 0.196549 | / | 0.183134 | |
= | 1.0733 |
Note: If the Depreciation, Depletion and Amortization data is not available, we assume that the depreciation rate is constant and set the Depreciation Index to 1.
6. SGAI = Sales, General and Administrative expenses Index
The ratio of Selling, General, & Admin. Expense(SGA) to Sales 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) |
= | (1162.6 / 12308.7) | / | (1089.5 / 11879.1) | |
= | 0.094454 | / | 0.091716 | |
= | 1.0299 |
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 in leverage
LVGI | = | ((LTD_t + CurrentLiabilities_t) / TotalAssets_t) | / | ((LTD_t-1 + CurrentLiabilities_t-1) / TotalAssets_t-1) |
= | ((3430.4 + 190) / 63255.2) | / | ((3427.8 + 192.9) / 61148.5) | |
= | 0.057235 | / | 0.059212 | |
= | 0.9666 |
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 | |
= | (1283.8 - 279.2 | - | 1202.8) | / | 63255.2 | |
= | -0.003133 |
An M-Score of equal or less than -1.78 suggests that the company is unlikely to be a manipulator. An M-Score of greater than -1.78 signals that the company is likely to be a manipulator.
Unum Group has a M-score of -2.52 suggests that the company is unlikely to be a manipulator.
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Puneet Bhasin | officer: Chief Info & Digital Officer | 1001 FANNIN, SUITE 4000, HOUSTON TX 77002 |
Christopher W Pyne | officer: EVP, Group Benefits | 1 FOUNTAIN SQUARE, LAW DEPT. (7N200), CHATTANOOGA TN 37402 |
Timothy Gerald Arnold | officer: EVP, President & CEO, Colonial | 1 FOUNTAIN SQUARE, CHATTANOOGA TN 37402 |
Mojgan M Lefebvre | director | 385 WASHINGTON STREET, ST. PAUL MN 55102 |
Rice Walter Lynn Jr | officer: SVP, Chief Accounting Officer | 1 FOUNTAIN SQUARE, CHATTANOOGA TN 37402-1307 |
Michael Q Simonds | officer: EVP, President & CEO, Unum US | 1 FOUNTAIN SQUARE, LAW DEPT. (7S730), CHATTANOOGA TN 37402 |
Gloria C Larson | director | UNUM GROUP, 1 FOUNTAIN SQUARE, CHATTANOOGA TN 37402 |
Lisa G Iglesias | officer: EVP, General Counsel | 1 FOUNTAIN SQUARE, LAW DEPT. 7S730, CHATTANOOGA TN 37402 |
Richard P Mckenney | officer: Executive Vice President | UNUM GROUP, 1 FOUNTAIN SQUARE, CHATTANOOGA TN 37402 |
Cherie Pashley | officer: SVP, Chief Accounting Officer | 1 FOUNTAIN SQUARE, LAW DEPT. 7N200, CHATTANOOGA TN 37402 |
Gale V. King | director | 123 SOUTH FRONT STREET, MEMPHIS TN 38103 |
Francis Shammo | director | 1 FOUNTAIN SQUARE, CHATTANOOGA TN 37402 |
Timothy F Keaney | director | 1 FOUNTAIN SQUARE, LAW DEPT. 7S730, CHATTANOOGA TN 37402 |
Mark Paul Till | officer: EVP & CEO Designate, Unum Intl | 1 FOUNTAIN SQUARE, LAW DEPARTMENT (E7N200), CHATTANOOGA TN 37402 |
Martha Leiper | officer: EVP, Chief Investment Officer | 9800 FREDERICKSBURG ROAD, SAN ANTONIO TX 78288 |
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