Switch to:
GuruFocus has detected 3 Warning Signs with United Parcel Service Inc $UPS.
More than 500,000 people have already joined GuruFocus to track the stocks they follow and exchange investment ideas.
United Parcel Service Inc (NYSE:UPS)
Beneish M-Score
-2.76 (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.

United Parcel Service Inc has a M-score of -2.76 suggests that the company is not a manipulator.

UPS' s Beneish M-Score Range Over the Past 10 Years
Min: -3.54   Max: -2.45
Current: -2.76

-3.54
-2.45

During the past 13 years, the highest Beneish M-Score of United Parcel Service Inc was -2.45. The lowest was -3.54. And the median was -2.77.


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 United Parcel Service 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 * 1.0336+0.528 * 1.0066+0.404 * 1.0861+0.892 * 1.0436+0.115 * 0.964
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0738+4.679 * -0.0766-0.327 * 1.0399
=-2.76

* 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 $7,695 Mil.
Revenue was 16931 + 14928 + 14629 + 14418 = $60,906 Mil.
Gross Profit was 12807 + 11541 + 11426 + 11310 = $47,084 Mil.
Total Current Assets was $13,849 Mil.
Total Assets was $40,377 Mil.
Property, Plant and Equipment(Net PPE) was $18,800 Mil.
Depreciation, Depletion and Amortization(DDA) was $2,224 Mil.
Selling, General & Admin. Expense(SGA) was $34,770 Mil.
Total Current Liabilities was $11,730 Mil.
Long-Term Debt was $12,394 Mil.
Net Income was -239 + 1270 + 1269 + 1131 = $3,431 Mil.
Non Operating Income was 12 + 13 + 8 + 17 = $50 Mil.
Cash Flow from Operations was 1110 + 670 + 2023 + 2670 = $6,473 Mil.
Accounts Receivable was $7,134 Mil.
Revenue was 16054 + 14237 + 14095 + 13977 = $58,363 Mil.
Gross Profit was 12398 + 11091 + 11092 + 10835 = $45,416 Mil.
Total Current Assets was $13,208 Mil.
Total Assets was $38,311 Mil.
Property, Plant and Equipment(Net PPE) was $18,352 Mil.
Depreciation, Depletion and Amortization(DDA) was $2,084 Mil.
Selling, General & Admin. Expense(SGA) was $31,028 Mil.
Total Current Liabilities was $10,696 Mil.
Long-Term Debt was $11,316 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)
=(7695 / 60906) / (7134 / 58363)
=0.12634223 / 0.12223498
=1.0336

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)
=(45416 / 58363) / (47084 / 60906)
=0.77816425 / 0.77306013
=1.0066

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 - (13849 + 18800) / 40377) / (1 - (13208 + 18352) / 38311)
=0.19139609 / 0.17621571
=1.0861

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
=60906 / 58363
=1.0436

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))
=(2084 / (2084 + 18352)) / (2224 / (2224 + 18800))
=0.1019769 / 0.10578387
=0.964

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)
=(34770 / 60906) / (31028 / 58363)
=0.57087972 / 0.5316382
=1.0738

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)
=((12394 + 11730) / 40377) / ((11316 + 10696) / 38311)
=0.59746886 / 0.57456083
=1.0399

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
=(3431 - 50 - 6473) / 40377
=-0.0766

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 Parcel Service Inc has a M-score of -2.76 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.

United Parcel Service Inc Annual Data

Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15Dec16
DSRI 1.00470.881.10020.95821.03560.95991.03880.97531.06861.0336
GMI 1.00771.03740.95531.05381.02490.99520.99521.00840.95941.0066
AQI 1.15990.60720.97050.95141.00051.00130.97061.2481.05121.0861
SGI 1.04511.03610.87981.09381.07191.01921.02421.05041.00221.0436
DEPI 1.04940.99521.02010.94791.01740.97630.9990.98930.93330.964
SGAI 1.19650.83791.08470.7850.96871.17780.84231.06830.96611.0738
LVGI 1.49771.10240.95461.04361.040.98770.98921.05151.1021.0399
TATA -0.0215-0.1725-0.0986-0.0149-0.0955-0.1655-0.0815-0.0766-0.0679-0.0766
M-score -2.66-3.51-2.99-2.48-2.82-3.31-2.79-2.74-2.77-2.76

United Parcel Service Inc Quarterly Data

Sep14Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16Dec16
DSRI 0.99970.97530.94150.93291.02411.06861.08341.06791.00431.0336
GMI 1.00531.00840.99720.98340.97060.95940.96570.97860.99041.0066
AQI 0.86491.2481.16681.09011.40821.05121.20451.22750.98111.0861
SGI 1.04141.05041.04751.03031.01551.00221.00641.01861.03141.0436
DEPI 0.98440.98930.96020.94980.94990.93330.94630.93970.94880.964
SGAI 0.89161.06831.07021.00981.02370.96610.96210.98430.97691.0738
LVGI 1.05691.05151.07151.03451.06431.1021.05131.03451.03961.0399
TATA -0.0759-0.0766-0.0827-0.1132-0.1023-0.0679-0.062-0.0764-0.037-0.0766
M-score -2.85-2.74-2.85-3.04-2.80-2.77-2.64-2.69-2.65-2.76
Get WordPress Plugins for easy affiliate links on Stock Tickers and Guru Names | Earn affiliate commissions by embedding GuruFocus Charts
GuruFocus Affiliate Program: Earn up to $400 per referral. ( Learn More)
FEEDBACK