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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.
During the past 13 years, the highest Beneish M-Score of United Continental Holdings Inc was -1.35. The lowest was -5.15. And the median was -2.79.
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 * 0.8877||+||0.528 * 0.8842||+||0.404 * 0.967||+||0.892 * 0.9952||+||0.115 * 1.0635|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0467||+||4.679 * -0.0172||-||0.327 * 0.9735|
|This Year (Jun15) TTM:||Last Year (Jun14) TTM:|
|Accounts Receivable was $1,471 Mil.|
Revenue was 9914 + 8608 + 9313 + 10563 = $38,398 Mil.
Gross Profit was 6241 + 3330 + 5871 + 5615 = $21,057 Mil.
Total Current Assets was $8,793 Mil.
Total Assets was $39,367 Mil.
Property, Plant and Equipment(Net PPE) was $20,701 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,727 Mil.
Selling, General & Admin. Expense(SGA) was $11,481 Mil.
Total Current Liabilities was $13,810 Mil.
Long-Term Debt was $10,501 Mil.
Net Income was 1193 + 508 + 28 + 924 = $2,653 Mil.
Non Operating Income was -100 + -74 + -443 + -106 = $-723 Mil.
Cash Flow from Operations was 1752 + 1825 + -98 + 574 = $4,053 Mil.
|Accounts Receivable was $1,665 Mil.
Revenue was 10329 + 8696 + 9329 + 10228 = $38,582 Mil.
Gross Profit was 5599 + 2495 + 5511 + 5102 = $18,707 Mil.
Total Current Assets was $9,619 Mil.
Total Assets was $38,447 Mil.
Property, Plant and Equipment(Net PPE) was $18,857 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,682 Mil.
Selling, General & Admin. Expense(SGA) was $11,021 Mil.
Total Current Liabilities was $13,334 Mil.
Long-Term Debt was $11,054 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)|
|=||(1471 / 38398)||/||(1665 / 38582)|
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)|
|=||(3330 / 38582)||/||(6241 / 38398)|
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 - (8793 + 20701) / 39367)||/||(1 - (9619 + 18857) / 38447)|
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))|
|=||(1682 / (1682 + 18857))||/||(1727 / (1727 + 20701))|
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)|
|=||(11481 / 38398)||/||(11021 / 38582)|
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)|
|=||((10501 + 13810) / 39367)||/||((11054 + 13334) / 38447)|
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|
|=||(2653 - -723||-||4053)||/||39367|
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