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GuruFocus has detected 6 Warning Signs with Union Pacific Corp $UNP.
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Union Pacific Corp (NYSE:UNP)
Beneish M-Score
-2.83 (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.

Union Pacific Corp has a M-score of -2.83 suggests that the company is not a manipulator.

UNP' s Beneish M-Score Range Over the Past 10 Years
Min: -7.31   Max: -0.97
Current: -2.83

-7.31
-0.97

During the past 13 years, the highest Beneish M-Score of Union Pacific Corp was -0.97. The lowest was -7.31. And the median was -2.62.


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 Union Pacific Corp 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 * 1.0148+0.528 * 0.9805+0.404 * 1.0587+0.892 * 0.9142+0.115 * 1.0173
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0068+4.679 * -0.0623-0.327 * 1.0426
=-2.83

* 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 $1,258 Mil.
Revenue was 5168 + 5174 + 4770 + 4829 = $19,941 Mil.
Gross Profit was 3904 + 3934 + 3568 + 3651 = $15,057 Mil.
Total Current Assets was $3,596 Mil.
Total Assets was $55,718 Mil.
Property, Plant and Equipment(Net PPE) was $50,389 Mil.
Depreciation, Depletion and Amortization(DDA) was $2,038 Mil.
Selling, General & Admin. Expense(SGA) was $4,750 Mil.
Total Current Liabilities was $3,640 Mil.
Long-Term Debt was $14,249 Mil.
Net Income was 1144 + 1131 + 979 + 979 = $4,233 Mil.
Non Operating Income was 37 + 26 + 74 + 44 = $181 Mil.
Cash Flow from Operations was 2058 + 1942 + 1352 + 2173 = $7,525 Mil.
Accounts Receivable was $1,356 Mil.
Revenue was 5208 + 5562 + 5429 + 5614 = $21,813 Mil.
Gross Profit was 3890 + 4187 + 3976 + 4096 = $16,149 Mil.
Total Current Assets was $4,130 Mil.
Total Assets was $54,600 Mil.
Property, Plant and Equipment(Net PPE) was $48,866 Mil.
Depreciation, Depletion and Amortization(DDA) was $2,012 Mil.
Selling, General & Admin. Expense(SGA) was $5,161 Mil.
Total Current Liabilities was $3,206 Mil.
Long-Term Debt was $13,607 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)
=(1258 / 19941) / (1356 / 21813)
=0.0630861 / 0.06216476
=1.0148

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)
=(16149 / 21813) / (15057 / 19941)
=0.74033833 / 0.75507748
=0.9805

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 - (3596 + 50389) / 55718) / (1 - (4130 + 48866) / 54600)
=0.03110305 / 0.02937729
=1.0587

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
=19941 / 21813
=0.9142

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))
=(2012 / (2012 + 48866)) / (2038 / (2038 + 50389))
=0.03954558 / 0.0388731
=1.0173

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)
=(4750 / 19941) / (5161 / 21813)
=0.2382027 / 0.23660203
=1.0068

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)
=((14249 + 3640) / 55718) / ((13607 + 3206) / 54600)
=0.32106321 / 0.3079304
=1.0426

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
=(4233 - 181 - 7525) / 55718
=-0.0623

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.

Union Pacific Corp has a M-score of -2.83 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.

Union Pacific Corp Annual Data

Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15Dec16
DSRI 0.89050.85161.42461.48211.02650.88791.01221.04310.92561.0148
GMI 1.02890.98790.8840.99671.03550.98010.9860.97560.93790.9805
AQI 0.99910.90291.01491.0550.97731.02771.22490.80990.90561.0587
SGI 1.04531.10360.7871.19951.15281.071.04961.09220.90930.9142
DEPI 0.9741.01030.99760.98730.96150.96751.03050.98760.99941.0173
SGAI 0.96850.87971.15830.88520.94130.93540.97760.96681.11811.0068
LVGI 1.06531.03921.00980.95020.96020.94891.00731.10351.09591.0426
TATA -0.0404-0.0448-0.0357-0.0319-0.0597-0.0493-0.0515-0.0449-0.0512-0.0623
M-score -2.73-2.77-2.53-1.95-2.57-2.73-2.58-2.69-2.99-2.83

Union Pacific Corp Quarterly Data

Sep14Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16Dec16
DSRI 1.02371.04310.94430.88790.9510.92560.98731.04151.02041.0148
GMI 0.96290.95750.94260.96810.95730.95570.9650.95640.97110.9805
AQI 1.31490.80990.820.74180.73150.90560.88710.96181.00741.0587
SGI 1.08721.09221.07411.02280.96990.90930.87750.87130.8780.9142
DEPI 0.99520.98760.9940.99410.99790.99940.99821.00391.01071.0173
SGAI 1.03271.0271.05820.98291.0151.05261.03571.06251.04191.0068
LVGI 1.11571.10351.06531.09681.07161.09591.12781.06531.08111.0426
TATA -0.0473-0.0449-0.0484-0.056-0.0526-0.0512-0.0555-0.052-0.056-0.0623
M-score -2.54-2.71-2.83-2.98-2.96-2.97-2.97-2.87-2.88-2.83
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