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GuruFocus has detected 2 Warning Signs with United Continental Holdings Inc $UAL.
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United Continental Holdings Inc (NYSE:UAL)
Beneish M-Score
-2.93 (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.

United Continental Holdings Inc has a M-score of -2.93 suggests that the company is not a manipulator.

UAL' s Beneish M-Score Range Over the Past 10 Years
Min: -3.91   Max: -1.28
Current: -2.93

-3.91
-1.28

During the past 13 years, the highest Beneish M-Score of United Continental Holdings Inc was -1.28. The lowest was -3.91. And the median was -2.80.


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 United Continental Holdings Inc 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 * 1.0799+0.528 * 0.945+0.404 * 0.8455+0.892 * 0.9655+0.115 * 0.9946
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0848+4.679 * -0.0812-0.327 * 1.0274
=-2.93

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

This Year (Dec16) TTM:Last Year (Dec15) TTM:
Accounts Receivable was $1,176 Mil.
Revenue was 9052 + 9913 + 9396 + 8195 = $36,556 Mil.
Gross Profit was 5785 + 6573 + 6244 + 5350 = $23,952 Mil.
Total Current Assets was $7,309 Mil.
Total Assets was $40,140 Mil.
Property, Plant and Equipment(Net PPE) was $23,318 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,977 Mil.
Selling, General & Admin. Expense(SGA) was $11,578 Mil.
Total Current Liabilities was $12,286 Mil.
Long-Term Debt was $10,740 Mil.
Net Income was 397 + 965 + 588 + 313 = $2,263 Mil.
Non Operating Income was -8 + 2 + 5 + -18 = $-19 Mil.
Cash Flow from Operations was 658 + 1138 + 2547 + 1199 = $5,542 Mil.
Accounts Receivable was $1,128 Mil.
Revenue was 9036 + 10306 + 9914 + 8608 = $37,864 Mil.
Gross Profit was 5724 + 6640 + 6047 + 5033 = $23,444 Mil.
Total Current Assets was $7,828 Mil.
Total Assets was $40,861 Mil.
Property, Plant and Equipment(Net PPE) was $21,580 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,819 Mil.
Selling, General & Admin. Expense(SGA) was $11,055 Mil.
Total Current Liabilities was $12,414 Mil.
Long-Term Debt was $10,400 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)
=(1176 / 36556) / (1128 / 37864)
=0.03216982 / 0.02979083
=1.0799

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)
=(23444 / 37864) / (23952 / 36556)
=0.61916332 / 0.65521392
=0.945

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 - (7309 + 23318) / 40140) / (1 - (7828 + 21580) / 40861)
=0.23699552 / 0.28029172
=0.8455

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
=36556 / 37864
=0.9655

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))
=(1819 / (1819 + 21580)) / (1977 / (1977 + 23318))
=0.07773836 / 0.07815774
=0.9946

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)
=(11578 / 36556) / (11055 / 37864)
=0.31671955 / 0.29196598
=1.0848

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)
=((10740 + 12286) / 40140) / ((10400 + 12414) / 40861)
=0.57364225 / 0.55833191
=1.0274

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
=(2263 - -19 - 5542) / 40140
=-0.0812

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.

United Continental Holdings Inc has a M-score of -2.93 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.

United Continental Holdings Inc Annual Data

Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15Dec16
DSRI 1.03980.8021.28651.52030.52920.98421.09020.75031.01131.0799
GMI 1.42971.75810.57011.31951.0151.04630.93840.99880.82810.945
AQI 0.92850.78840.90861.33871.03880.98241.07010.8951.07060.8455
SGI 1.04151.00250.80891.42791.5911.00111.03031.01620.97330.9655
DEPI 0.95480.90850.97231.4240.69521.06440.91151.11781.02140.9946
SGAI 1.79580.62751.12990.90251.0731.01811.03290.92621.10181.0848
LVGI 0.96941.15081.02070.84370.9471.06410.97891.0060.88711.0274
TATA -0.0732-0.1853-0.0885-0.0429-0.0392-0.0444-0.0238-0.02510.0416-0.0812
M-score -2.68-3.21-3.10-1.40-2.58-2.70-2.49-2.83-2.34-2.93

United Continental Holdings Inc Quarterly Data

Sep14Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16Dec16
DSRI 0.89090.75030.90110.88770.99021.01131.11391.02481.02171.0799
GMI 1.00461.13340.86550.85520.84420.73870.84420.85260.88380.945
AQI 0.95480.8950.98060.9670.97731.07061.04531.00910.95160.8455
SGI 1.03361.01621.01460.99520.98010.97330.96490.96180.9580.9655
DEPI 1.05131.11781.03861.06351.04751.02141.03550.97720.97540.9946
SGAI 0.89990.71711.11511.11341.08461.39271.13861.15011.16641.0848
LVGI 0.97731.0060.97180.97350.93260.88710.93390.961.01491.0274
TATA -0.028-0.0251-0.0242-0.01720.06040.04160.05140.0141-0.081-0.0812
M-score -2.67-2.72-2.76-2.76-2.30-2.44-2.23-2.51-2.99-2.93
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