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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 -4.84. And the median was -2.90.
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 * 0.9844||+||0.528 * 0.9687||+||0.404 * 0.9389||+||0.892 * 1.0731||+||0.115 * 0.9877|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9725||+||4.679 * -0.1038||-||0.327 * 1.0147|
|This Year (Sep15) TTM:||Last Year (Sep14) TTM:|
|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.
Net Income was 215 + 86 + 115 + 194 = $610 Mil.
Non Operating Income was -1 + 6 + -3 + 24 = $26 Mil.
Cash Flow from Operations was 307 + 575 + 675 + 335 = $1,892 Mil.
|Accounts Receivable was $941 Mil.
Revenue was 1544 + 1399 + 1178 + 1338 = $5,459 Mil.
Gross Profit was 688 + 589 + 448 + 567 = $2,292 Mil.
Total Current Assets was $1,378 Mil.
Total Assets was $12,483 Mil.
Property, Plant and Equipment(Net PPE) was $6,569 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,166 Mil.
Selling, General & Admin. Expense(SGA) was $712 Mil.
Total Current Liabilities was $1,695 Mil.
Long-Term Debt was $7,477 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)|
|=||(994 / 5858)||/||(941 / 5459)|
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)|
|=||(618 / 5459)||/||(690 / 5858)|
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 - (1426 + 6874) / 12598)||/||(1 - (1378 + 6569) / 12483)|
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))|
|=||(1166 / (1166 + 6569))||/||(1238 / (1238 + 6874))|
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)|
|=||(743 / 5858)||/||(712 / 5459)|
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)|
|=||((7876 + 1517) / 12598)||/||((7477 + 1695) / 12483)|
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|
|=||(610 - 26||-||1892)||/||12598|
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 -2.96 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