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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 -1.28. The lowest was -3.91. And the median was -2.80.
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|
|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
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)|
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)|
|=||(23444 / 37864)||/||(23952 / 36556)|
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 - (7309 + 23318) / 40140)||/||(1 - (7828 + 21580) / 40861)|
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))|
|=||(1819 / (1819 + 21580))||/||(1977 / (1977 + 23318))|
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)|
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)|
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|
|=||(2263 - -19||-||5542)||/||40140|
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.
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