Unum Group 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 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.
Quick Browse
Personalize
Premium Gurus 
Create New Portfolio
Portfolio Contest
UNM has been successfully added to your