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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 -4.81. And the median was -3.01.
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 * 0.9502||+||0.528 * 1.0432||+||0.404 * 0.9692||+||0.892 * 0.9836||+||0.115 * 0.9938|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9756||+||4.679 * -0.1215||-||0.327 * 0.9629|
|This Year (Sep16) TTM:||Last Year (Sep15) TTM:|
|Accounts Receivable was $929 Mil.|
Revenue was 1508 + 1421 + 1310 + 1523 = $5,762 Mil.
Gross Profit was 656 + 590 + 500 + 648 = $2,394 Mil.
Total Current Assets was $1,354 Mil.
Total Assets was $12,275 Mil.
Property, Plant and Equipment(Net PPE) was $6,862 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,245 Mil.
Selling, General & Admin. Expense(SGA) was $713 Mil.
Total Current Liabilities was $1,420 Mil.
Long-Term Debt was $7,393 Mil.
Net Income was 187 + 134 + 92 + 169 = $582 Mil.
Non Operating Income was 1 + 2 + 0 + 2 = $5 Mil.
Cash Flow from Operations was 383 + 643 + 604 + 438 = $2,068 Mil.
|Accounts Receivable was $994 Mil.
Revenue was 1550 + 1429 + 1315 + 1564 = $5,858 Mil.
Gross Profit was 690 + 618 + 524 + 707 = $2,539 Mil.
Total Current Assets was $1,426 Mil.
Total Assets was $12,598 Mil.
Property, Plant and Equipment(Net PPE) was $6,874 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,238 Mil.
Selling, General & Admin. Expense(SGA) was $743 Mil.
Total Current Liabilities was $1,517 Mil.
Long-Term Debt was $7,876 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)|
|=||(929 / 5762)||/||(994 / 5858)|
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)|
|=||(2539 / 5858)||/||(2394 / 5762)|
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 - (1354 + 6862) / 12275)||/||(1 - (1426 + 6874) / 12598)|
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))|
|=||(1238 / (1238 + 6874))||/||(1245 / (1245 + 6862))|
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)|
|=||(713 / 5762)||/||(743 / 5858)|
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)|
|=||((7393 + 1420) / 12275)||/||((7876 + 1517) / 12598)|
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|
|=||(582 - 5||-||2068)||/||12275|
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 -3.08 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