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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 -2.73 suggests that the company is not a manipulator.
During the past 13 years, the highest Beneish M-Score of United Continental Holdings Inc was -1.35. The lowest was -5.10. And the median was -2.82.
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 * 0.8909||+||0.528 * 0.9217||+||0.404 * 0.9548||+||0.892 * 1.0336||+||0.115 * 1.0111|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0062||+||4.679 * -0.028||-||0.327 * 0.9773|
|This Year (Sep14) TTM:||Last Year (Sep13) TTM:|
|Accounts Receivable was $1,559 Mil.|
Revenue was 10563 + 10329 + 8696 + 9329 = $38,917 Mil.
Gross Profit was 5615 + 5377 + 4190 + 5511 = $20,693 Mil.
Total Current Assets was $9,225 Mil.
Total Assets was $38,011 Mil.
Property, Plant and Equipment(Net PPE) was $18,943 Mil.
Depreciation, Depletion and Amortization(DDA) was $2,937 Mil.
Selling, General & Admin. Expense(SGA) was $13,325 Mil.
Total Current Liabilities was $12,864 Mil.
Long-Term Debt was $10,655 Mil.
Net Income was 924 + 789 + -609 + 140 = $1,244 Mil.
Non Operating Income was -106 + 54 + -89 + 51 = $-90 Mil.
Cash Flow from Operations was 574 + 1464 + 694 + -334 = $2,398 Mil.
|Accounts Receivable was $1,693 Mil.
Revenue was 10228 + 10001 + 8721 + 8702 = $37,652 Mil.
Gross Profit was 5102 + 5083 + 4148 + 4119 = $18,452 Mil.
Total Current Assets was $9,389 Mil.
Total Assets was $37,260 Mil.
Property, Plant and Equipment(Net PPE) was $17,766 Mil.
Depreciation, Depletion and Amortization(DDA) was $2,790 Mil.
Selling, General & Admin. Expense(SGA) was $12,812 Mil.
Total Current Liabilities was $12,604 Mil.
Long-Term Debt was $10,985 Mil.
1. DSRI = Days Sales in Receivables Index
A large increase in DSR could be indicative of revenue inflation.
|DSRI||=||(Receivables_t / Revenue_t)||/||(Receivables_t-1 / Revenue_t-1)|
|=||(1559 / 38917)||/||(1693 / 37652)|
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.
|=||(GrossProfit_t-1 / Revenue_t-1)||/||(GrossProfit_t / Revenue_t)|
|=||(5377 / 37652)||/||(5615 / 38917)|
3. AQI = Asset Quality Index
AQI is the ratio of asset quality in year t to year t-1.
|AQI||=||(1 - (CurrentAssets_t + PPE_t) / TotalAssets_t)||/||(1 - (CurrentAssets_t-1 + PPE_t-1) / TotalAssets_t-1)|
|=||(1 - (9225 + 18943) / 38011)||/||(1 - (9389 + 17766) / 37260)|
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.
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))|
|=||(2790 / (2790 + 17766))||/||(2937 / (2937 + 18943))|
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)|
|=||(13325 / 38917)||/||(12812 / 37652)|
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)|
|=||((10655 + 12864) / 38011)||/||((10985 + 12604) / 37260)|
8. TATA = Total Accruals to Total Assets
Total accruals calculated as the change in working capital accounts other than cash less depreciation.
|=||(NetIncome_t - NonOperatingIncome_t||-||CashFlowsfromOperations_t)||/||TotalAssets_t|
|=||(1244 - -90||-||2398)||/||38011|
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 -2.73 suggests that the company will not be a manipulator.
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
United Continental Holdings Inc Annual Data
United Continental Holdings Inc Quarterly Data