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United Parcel Service Inc (NYSE:UPS)
Beneish M-Score
-2.77 (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 -2.77 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: -2.77

-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 * 1.0686+0.528 * 0.9594+0.404 * 1.0512+0.892 * 1.0022+0.115 * 0.9333
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9661+4.679 * -0.0679-0.327 * 1.102
=-2.77

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.

This Year (Dec15) TTM:Last Year (Dec14) TTM:
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.
Net Income was 1331 + 1257 + 1230 + 1026 = $4,844 Mil.
Non Operating Income was 3 + 4 + 4 + 4 = $15 Mil.
Cash Flow from Operations was 1015 + 2176 + 1488 + 2751 = $7,430 Mil.
Accounts Receivable was $6,661 Mil.
Revenue was 15895 + 14290 + 14268 + 13779 = $58,232 Mil.
Gross Profit was 11802 + 10681 + 10718 + 10273 = $43,474 Mil.
Total Current Assets was $11,218 Mil.
Total Assets was $35,440 Mil.
Property, Plant and Equipment(Net PPE) was $18,281 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,923 Mil.
Selling, General & Admin. Expense(SGA) was $32,045 Mil.
Total Current Liabilities was $8,621 Mil.
Long-Term Debt was $9,856 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)
=(7134 / 58363) / (6661 / 58232)
=0.12223498 / 0.11438728
=1.0686

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)
=(11091 / 58232) / (12398 / 58363)
=0.74656546 / 0.77816425
=0.9594

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 - (13208 + 18352) / 38311) / (1 - (11218 + 18281) / 35440)
=0.17621571 / 0.16763544
=1.0512

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
=58363 / 58232
=1.0022

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))
=(1923 / (1923 + 18281)) / (2084 / (2084 + 18352))
=0.09517917 / 0.1019769
=0.9333

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)
=(31028 / 58363) / (32045 / 58232)
=0.5316382 / 0.5502988
=0.9661

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)
=((11316 + 10696) / 38311) / ((9856 + 8621) / 35440)
=0.57456083 / 0.52136005
=1.102

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
=(4844 - 15 - 7430) / 38311
=-0.0679

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 -2.77 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 own currency.

United Parcel Service Inc Annual Data

Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15
DSRI 0.90351.00470.881.10020.95821.03560.95991.03880.97531.0686
GMI 1.03150.86451.03740.95531.02831.05030.99520.99521.00840.9594
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 0.97131.46290.83791.08470.92030.82631.17780.84231.06830.9661
LVGI 1.07131.49771.10240.95461.04361.040.98770.98921.05151.102
TATA -0.0444-0.0215-0.1725-0.0986-0.0104-0.0955-0.1655-0.0815-0.0766-0.0679
M-score -2.74-2.78-3.51-2.99-2.49-2.78-3.31-2.79-2.74-2.77

United Parcel Service Inc Quarterly Data

Dec13Mar14Jun14Sep14Dec14Mar15Jun15Sep15Dec15Mar16
DSRI 1.03881.00811.03760.99970.97530.94150.93291.02411.0686
GMI 0.99520.99711.00071.00531.00840.99720.98340.97060.9594
AQI 0.97060.85390.89030.86491.2481.16681.09011.40821.0512
SGI 1.02421.0251.03591.04141.05041.04751.03031.01551.0022
DEPI 0.9990.99981.00110.98440.98930.96020.94980.94990.9333
SGAI 0.84230.8470.87240.89161.06831.07021.00981.02370.9661
LVGI 0.98921.02311.06791.05691.05151.07151.03451.06431.102
TATA -0.0815-0.0966-0.0606-0.0759-0.0766-0.0827-0.1132-0.1023-0.0679
M-score -2.79-2.94-2.74-2.85-2.74-2.85-3.04-2.80-2.77
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