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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.
United Parcel Service Inc (UPS) has a M-score of -2.74 suggests that the company is not a manipulator.
During the past 13 years, the highest Beneish M-Score of United Parcel Service Inc (UPS) was -0.52. The lowest was -3.65. And the median was -2.79.
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 (UPS) 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 * 1.0376||+||0.528 * 1.001||+||0.404 * 0.8903||+||0.892 * 1.0359||+||0.115 * 1.0011|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.8762||+||4.679 * -0.0606||-||0.327 * 1.0679|
* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.
|This Year (Jun14) TTM:||Last Year (Jun13) TTM:|
|Accounts Receivable was $5,845 Mil.|
Revenue was 14268 + 13779 + 14976 + 13521 = $56,544 Mil.
Gross Profit was 10718 + 10273 + 13353 + 10236 = $44,580 Mil.
Total Current Assets was $12,341 Mil.
Total Assets was $34,861 Mil.
Property, Plant and Equipment(Net PPE) was $17,787 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,868 Mil.
Selling, General & Admin. Expense(SGA) was $31,198 Mil.
Total Current Liabilities was $8,337 Mil.
Long-Term Debt was $9,940 Mil.
Net Income was 454 + 911 + 1167 + 1097 = $3,629 Mil.
Non Operating Income was 25 + 0 + 10 + 2 = $37 Mil.
Cash Flow from Operations was -435 + 2267 + 2244 + 1629 = $5,705 Mil.
|Accounts Receivable was $5,438 Mil.
Revenue was 13507 + 13434 + 14571 + 13071 = $54,583 Mil.
Gross Profit was 10250 + 10086 + 12909 + 9833 = $43,078 Mil.
Total Current Assets was $13,226 Mil.
Total Assets was $36,703 Mil.
Property, Plant and Equipment(Net PPE) was $17,880 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,880 Mil.
Selling, General & Admin. Expense(SGA) was $34,371 Mil.
Total Current Liabilities was $7,183 Mil.
Long-Term Debt was $10,837 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)|
|=||(5845 / 56544)||/||(5438 / 54583)|
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)|
|=||(10273 / 54583)||/||(10718 / 56544)|
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 - (12341 + 17787) / 34861)||/||(1 - (13226 + 17880) / 36703)|
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))|
|=||(1880 / (1880 + 17880))||/||(1868 / (1868 + 17787))|
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)|
|=||(31198 / 56544)||/||(34371 / 54583)|
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)|
|=||((9940 + 8337) / 34861)||/||((10837 + 7183) / 36703)|
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|
|=||(3629 - 37||-||5705)||/||34861|
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 (UPS) has a M-score of -2.74 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 Parcel Service Inc (UPS) Annual Data
United Parcel Service Inc (UPS) Quarterly Data