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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 -4.08. And the median was -2.78.
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 * 1.0248||+||0.528 * 0.8749||+||0.404 * 1.0091||+||0.892 * 0.9618||+||0.115 * 0.9772|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0925||+||4.679 * 0.0141||-||0.327 * 0.96|
|This Year (Jun16) TTM:||Last Year (Jun15) TTM:|
|Accounts Receivable was $1,450 Mil.|
Revenue was 9396 + 8195 + 9036 + 10306 = $36,933 Mil.
Gross Profit was 6244 + 5350 + 5898 + 6825 = $24,317 Mil.
Total Current Assets was $7,844 Mil.
Total Assets was $40,476 Mil.
Property, Plant and Equipment(Net PPE) was $22,388 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,915 Mil.
Selling, General & Admin. Expense(SGA) was $11,723 Mil.
Total Current Liabilities was $13,982 Mil.
Long-Term Debt was $10,015 Mil.
Net Income was 588 + 313 + 823 + 4816 = $6,540 Mil.
Non Operating Income was 5 + -18 + -31 + -147 = $-191 Mil.
Cash Flow from Operations was 2547 + 1199 + 1115 + 1300 = $6,161 Mil.
|Accounts Receivable was $1,471 Mil.
Revenue was 9914 + 8608 + 9313 + 10563 = $38,398 Mil.
Gross Profit was 6047 + 5033 + 5203 + 5837 = $22,120 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 $11,156 Mil.
Total Current Liabilities was $13,810 Mil.
Long-Term Debt was $10,501 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)|
|=||(1450 / 36933)||/||(1471 / 38398)|
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)|
|=||(22120 / 38398)||/||(24317 / 36933)|
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 - (7844 + 22388) / 40476)||/||(1 - (8793 + 20701) / 39367)|
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))|
|=||(1727 / (1727 + 20701))||/||(1915 / (1915 + 22388))|
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)|
|=||(11723 / 36933)||/||(11156 / 38398)|
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)|
|=||((10015 + 13982) / 40476)||/||((10501 + 13810) / 39367)|
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|
|=||(6540 - -191||-||6161)||/||40476|
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 -2.49 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