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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.
During the past 13 years, the highest Beneish M-Score of United Rentals Inc was -0.73. The lowest was -4.82. And the median was -3.02.
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 Rentals 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 * 1.0259||+||0.528 * 1.0154||+||0.404 * 0.9568||+||0.892 * 0.9993||+||0.115 * 1.012|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0359||+||4.679 * -0.1177||-||0.327 * 0.9562|
|This Year (Mar17) TTM:||Last Year (Mar16) TTM:|
|Accounts Receivable was $854 Mil.|
Revenue was 1356 + 1523 + 1508 + 1421 = $5,808 Mil.
Gross Profit was 514 + 657 + 656 + 590 = $2,417 Mil.
Total Current Assets was $1,320 Mil.
Total Assets was $11,822 Mil.
Property, Plant and Equipment(Net PPE) was $6,533 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,245 Mil.
Selling, General & Admin. Expense(SGA) was $735 Mil.
Total Current Liabilities was $1,317 Mil.
Long-Term Debt was $6,772 Mil.
Net Income was 109 + 153 + 187 + 134 = $583 Mil.
Non Operating Income was -2 + 2 + 1 + 2 = $3 Mil.
Cash Flow from Operations was 623 + 323 + 383 + 643 = $1,972 Mil.
|Accounts Receivable was $833 Mil.
Revenue was 1310 + 1523 + 1550 + 1429 = $5,812 Mil.
Gross Profit was 500 + 648 + 690 + 618 = $2,456 Mil.
Total Current Assets was $1,182 Mil.
Total Assets was $11,784 Mil.
Property, Plant and Equipment(Net PPE) was $6,467 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,250 Mil.
Selling, General & Admin. Expense(SGA) was $710 Mil.
Total Current Liabilities was $1,229 Mil.
Long-Term Debt was $7,203 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)|
|=||(854 / 5808)||/||(833 / 5812)|
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)|
|=||(2456 / 5812)||/||(2417 / 5808)|
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 - (1320 + 6533) / 11822)||/||(1 - (1182 + 6467) / 11784)|
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))|
|=||(1250 / (1250 + 6467))||/||(1245 / (1245 + 6533))|
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)|
|=||(735 / 5808)||/||(710 / 5812)|
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)|
|=||((6772 + 1317) / 11822)||/||((7203 + 1229) / 11784)|
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|
|=||(583 - 3||-||1972)||/||11822|
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 Rentals Inc has a M-score of -3.01 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 Rentals Inc Annual Data
United Rentals Inc Quarterly Data