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GuruFocus has detected 4 Warning Signs with United Rentals Inc $URI.
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United Rentals Inc (NYSE:URI)
Beneish M-Score
-3.02 (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 Rentals Inc has a M-score of -3.02 suggests that the company is not a manipulator.

URI' s Beneish M-Score Range Over the Past 10 Years
Min: -4.72   Max: -1.08
Current: -3.02

-4.72
-1.08

During the past 13 years, the highest Beneish M-Score of United Rentals Inc was -1.08. The lowest was -4.72. And the median was -3.01.


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 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 * 0.9987+0.528 * 1.0223+0.404 * 0.9716+0.892 * 0.9905+0.115 * 0.9978
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0166+4.679 * -0.1161-0.327 * 0.9608
=-3.02

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

This Year (Dec16) TTM:Last Year (Dec15) TTM:
Accounts Receivable was $920 Mil.
Revenue was 1523 + 1508 + 1421 + 1310 = $5,762 Mil.
Gross Profit was 657 + 656 + 590 + 500 = $2,403 Mil.
Total Current Assets was $1,361 Mil.
Total Assets was $11,988 Mil.
Property, Plant and Equipment(Net PPE) was $6,619 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,245 Mil.
Selling, General & Admin. Expense(SGA) was $719 Mil.
Total Current Liabilities was $1,184 Mil.
Long-Term Debt was $7,193 Mil.
Net Income was 153 + 187 + 134 + 92 = $566 Mil.
Non Operating Income was 2 + 1 + 2 + 0 = $5 Mil.
Cash Flow from Operations was 323 + 383 + 643 + 604 = $1,953 Mil.
Accounts Receivable was $930 Mil.
Revenue was 1523 + 1550 + 1429 + 1315 = $5,817 Mil.
Gross Profit was 648 + 690 + 618 + 524 = $2,480 Mil.
Total Current Assets was $1,294 Mil.
Total Assets was $12,083 Mil.
Property, Plant and Equipment(Net PPE) was $6,631 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,244 Mil.
Selling, General & Admin. Expense(SGA) was $714 Mil.
Total Current Liabilities was $1,233 Mil.
Long-Term Debt was $7,555 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)
=(920 / 5762) / (930 / 5817)
=0.15966678 / 0.15987622
=0.9987

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)
=(2480 / 5817) / (2403 / 5762)
=0.4263366 / 0.41704269
=1.0223

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 - (1361 + 6619) / 11988) / (1 - (1294 + 6631) / 12083)
=0.33433433 / 0.34411984
=0.9716

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
=5762 / 5817
=0.9905

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))
=(1244 / (1244 + 6631)) / (1245 / (1245 + 6619))
=0.15796825 / 0.15831638
=0.9978

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)
=(719 / 5762) / (714 / 5817)
=0.12478306 / 0.12274368
=1.0166

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)
=((7193 + 1184) / 11988) / ((7555 + 1233) / 12083)
=0.69878212 / 0.72730282
=0.9608

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
=(566 - 5 - 1953) / 11988
=-0.1161

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 -3.02 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 local exchange's currency.

United Rentals Inc Annual Data

Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15Dec16
DSRI 1.0130.99471.02841.17921.05451.08390.84241.0190.96690.9987
GMI 1.00421.03041.32280.87950.85520.89220.96130.93741.00341.0223
AQI 0.92810.28241.12651.00741.32053.68780.93250.99660.95180.9716
SGI 1.02060.87940.72180.94871.16721.57681.20351.14731.02320.9905
DEPI 1.0570.94410.97010.99211.03760.97210.89511.01930.98930.9978
SGAI 0.95580.99451.08080.94820.95010.91620.90721.02910.92061.0166
LVGI 0.90641.62680.98551.00140.95740.86530.95381.040.99990.9608
TATA -0.1053-0.3503-0.1298-0.1302-0.1241-0.0598-0.1041-0.1051-0.1177-0.1161
M-score -2.92-4.72-3.10-3.02-2.78-1.08-2.96-2.87-3.05-3.02

United Rentals Inc Quarterly Data

Sep14Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16Dec16
DSRI 1.03941.0190.97480.94590.98440.96690.9840.97780.95020.9987
GMI 0.93730.93740.94550.95690.96871.00341.01941.03631.04321.0223
AQI 1.01740.99661.00220.9310.93890.95180.97640.97930.96920.9716
SGI 1.12191.14731.15681.11981.07311.02320.99830.99180.98360.9905
DEPI 1.0141.01931.00190.98210.98770.98930.9870.97920.99380.9978
SGAI 0.96891.02911.02540.98950.97250.92060.92250.94580.97561.0166
LVGI 1.01511.041.05091.01741.01470.99990.97250.97040.96290.9608
TATA -0.0745-0.136-0.1639-0.1628-0.1721-0.1177-0.1163-0.1144-0.1215-0.1161
M-score -2.71-3.02-3.18-3.24-3.28-3.05-3.02-3.02-3.08-3.02
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