Elevance Health Beneish M-Score Calculation
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 Elevance Health 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 * 1.0459 | + | 0.528 * 1 | + | 0.404 * 1.0379 | + | 0.892 * 1.031 | + | 0.115 * 1.0949 |
| - | 0.172 * SGAI | + | 4.679 * TATA | - | 0.327 * LVGI |
| - | 0.172 * 0.248 | + | 4.679 * -0.155381 | - | 0.327 * 0.9664 |
| = | -2.97 |
* 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 (Mar24) TTM: | Last Year (Mar23) TTM: |
Total Receivables was €16,830 Mil.
Revenue was 39170.84 + 39107.299 + 40149.513 + 40309.256 = €158,737 Mil.
Gross Profit was 39170.84 + 39107.299 + 40149.513 + 40309.256 = €158,737 Mil.
Total Current Assets was €49,725 Mil.
Total Assets was €102,942 Mil.
Property, Plant and Equipment(Net PPE) was €4,095 Mil.
Depreciation, Depletion and Amortization(DDA) was €1,492 Mil.
Selling, General, & Admin. Expense(SGA) was €4,447 Mil.
Total Current Liabilities was €25,821 Mil.
Long-Term Debt & Capital Lease Obligation was €20,218 Mil.
Net Income was 2066.32 + 784.952 + 1207.793 + 1710.319 = €5,769 Mil.
Non Operating Income was 4139.08 + 4946.298 + 4850.849 + 4484.857 = €18,421 Mil.
Cash Flow from Operations was 1819.76 + -2724.407 + 2448.381 + 1799.85 = €3,344 Mil.
|
Total Receivables was €15,607 Mil.
Revenue was 39388.648 + 37692.976 + 40338.39 + 36545.872 = €153,966 Mil.
Gross Profit was 39388.648 + 37692.976 + 40338.39 + 36545.872 = €153,966 Mil.
Total Current Assets was €50,892 Mil.
Total Assets was €101,843 Mil.
Property, Plant and Equipment(Net PPE) was €4,126 Mil.
Depreciation, Depletion and Amortization(DDA) was €1,705 Mil.
Selling, General, & Admin. Expense(SGA) was €17,390 Mil.
Total Current Liabilities was €23,593 Mil.
Long-Term Debt & Capital Lease Obligation was €23,538 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) |
| = | (16829.56 / 158736.908) | / | (15607.14 / 153965.886) |
| = | 0.106022 | / | 0.101368 |
| | = | 1.0459 |
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) |
| = | (153965.886 / 153965.886) | / | (158736.908 / 158736.908) |
| = | 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 - (49725.08 + 4094.92) / 102942.48) | / | (1 - (50891.792 + 4126.412) / 101843.36) |
| = | 0.477184 | / | 0.459776 |
| | = | 1.0379 |
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 |
| = | 158736.908 | / | 153965.886 |
| | = | 1.031 |
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)) |
| = | (1705.308 / (1705.308 + 4126.412)) | / | (1492.149 / (1492.149 + 4094.92)) |
| = | 0.292419 | / | 0.267072 |
| | = | 1.0949 |
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) |
| = | (4447.014 / 158736.908) | / | (17390.18 / 153965.886) |
| = | 0.028015 | / | 0.112948 |
| | = | 0.248 |
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) |
| = | ((20217.92 + 25820.72) / 102942.48) | / | ((23537.734 + 23592.84) / 101843.36) |
| = | 0.447227 | / | 0.462775 |
| | = | 0.9664 |
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 |
| = | (5769.384 - 18421.084 | - | 3343.584) | / | 102942.48 |
| | = | -0.155381 |
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.
Elevance Health has a M-score of -2.97 suggests that the company is unlikely to be a manipulator.
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