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United Parcel Service Inc (NYSE:UPS)
Beneish M-Score
-2.65 (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 -2.65 suggests that the company is not a manipulator.

UPS' s Beneish M-Score Range Over the Past 10 Years
Min: -3.88   Max: -2.36
Current: -2.65

-3.88
-2.36

During the past 13 years, the highest Beneish M-Score of United Parcel Service Inc was -2.36. The lowest was -3.88. And the median was -2.75.


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 * 1.0043+0.528 * 0.9904+0.404 * 0.9811+0.892 * 1.0314+0.115 * 0.9488
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9769+4.679 * -0.037-0.327 * 1.0396
=-2.65

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

This Year (Sep16) TTM:Last Year (Sep15) TTM:
Accounts Receivable was $6,272 Mil.
Revenue was 14928 + 14629 + 14418 + 16054 = $60,029 Mil.
Gross Profit was 11541 + 11426 + 11310 + 12398 = $46,675 Mil.
Total Current Assets was $12,853 Mil.
Total Assets was $38,342 Mil.
Property, Plant and Equipment(Net PPE) was $18,489 Mil.
Depreciation, Depletion and Amortization(DDA) was $2,202 Mil.
Selling, General & Admin. Expense(SGA) was $31,952 Mil.
Total Current Liabilities was $10,889 Mil.
Long-Term Debt was $11,506 Mil.
Net Income was 1270 + 1269 + 1131 + 1331 = $5,001 Mil.
Non Operating Income was 13 + 8 + 17 + 3 = $41 Mil.
Cash Flow from Operations was 670 + 2023 + 2670 + 1015 = $6,378 Mil.
Accounts Receivable was $6,055 Mil.
Revenue was 14237 + 14095 + 13977 + 15895 = $58,204 Mil.
Gross Profit was 11091 + 11092 + 10835 + 11802 = $44,820 Mil.
Total Current Assets was $13,581 Mil.
Total Assets was $39,002 Mil.
Property, Plant and Equipment(Net PPE) was $18,163 Mil.
Depreciation, Depletion and Amortization(DDA) was $2,040 Mil.
Selling, General & Admin. Expense(SGA) was $31,712 Mil.
Total Current Liabilities was $11,869 Mil.
Long-Term Debt was $10,044 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)
=(6272 / 60029) / (6055 / 58204)
=0.10448283 / 0.10403065
=1.0043

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)
=(44820 / 58204) / (46675 / 60029)
=0.77005017 / 0.77754086
=0.9904

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 - (12853 + 18489) / 38342) / (1 - (13581 + 18163) / 39002)
=0.18256742 / 0.18609302
=0.9811

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
=60029 / 58204
=1.0314

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))
=(2040 / (2040 + 18163)) / (2202 / (2202 + 18489))
=0.1009751 / 0.10642308
=0.9488

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)
=(31952 / 60029) / (31712 / 58204)
=0.53227607 / 0.54484228
=0.9769

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)
=((11506 + 10889) / 38342) / ((10044 + 11869) / 39002)
=0.58408534 / 0.56184298
=1.0396

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
=(5001 - 41 - 6378) / 38342
=-0.037

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 -2.65 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

Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15
DSRI 0.90351.00470.881.10020.95821.03560.95991.03880.97531.0686
GMI 0.88491.00771.03740.95531.05381.02490.99520.99521.00840.9594
AQI 0.83121.15990.60720.97050.95141.00051.00130.97061.2481.0512
SGI 1.11661.04511.03610.87981.09381.07191.01921.02421.05041.0022
DEPI 1.0291.04940.99521.02010.94791.01740.97630.9990.98930.9333
SGAI 1.18751.19650.83791.08470.7850.96871.17780.84231.06830.9661
LVGI 1.07131.49771.10240.95461.04361.040.98770.98921.05151.102
TATA -0.0444-0.0215-0.1725-0.0986-0.0149-0.0955-0.1655-0.0815-0.0766-0.0679
M-score -2.85-2.66-3.51-2.99-2.48-2.82-3.31-2.79-2.74-2.77

United Parcel Service Inc Quarterly Data

Jun14Sep14Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16
DSRI 1.03760.99970.97530.94150.93291.02411.06861.08341.06791.0043
GMI 1.00071.00531.00840.99720.98340.97060.95940.96570.97860.9904
AQI 0.89030.86491.2481.16681.09011.40821.05121.20451.22750.9811
SGI 1.03591.04141.05041.04751.03031.01551.00221.00641.01861.0314
DEPI 1.00110.98440.98930.96020.94980.94990.93330.94630.93970.9488
SGAI 0.87240.89161.06831.07021.00981.02370.96610.96210.98430.9769
LVGI 1.06791.05691.05151.07151.03451.06431.1021.05131.03451.0396
TATA -0.0606-0.0759-0.0766-0.0827-0.1132-0.1023-0.0679-0.062-0.0764-0.037
M-score -2.74-2.85-2.74-2.85-3.04-2.80-2.77-2.64-2.69-2.65
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