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GuruFocus has detected 6 Warning Signs with Union Pacific Corp $UNP.
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Union Pacific Corp (NYSE:UNP)
Beneish M-Score
-2.76 (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.

Union Pacific Corp has a M-score of -2.76 suggests that the company is not a manipulator.

UNP' s Beneish M-Score Range Over the Past 10 Years
Min: -3.54   Max: -0.92
Current: -2.76

-3.54
-0.92

During the past 13 years, the highest Beneish M-Score of Union Pacific Corp was -0.92. The lowest was -3.54. And the median was -2.66.


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 Union Pacific Corp 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 * 0.9805+0.528 * 0.9923+0.404 * 1.0865+0.892 * 0.9627+0.115 * 1.0131
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9949+4.679 * -0.0557-0.327 * 1.0021
=-2.76

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

This Year (Mar17) TTM:Last Year (Mar16) TTM:
Accounts Receivable was $1,279 Mil.
Revenue was 5132 + 5168 + 5174 + 4770 = $20,244 Mil.
Gross Profit was 3830 + 3904 + 3934 + 3568 = $15,236 Mil.
Total Current Assets was $3,588 Mil.
Total Assets was $55,900 Mil.
Property, Plant and Equipment(Net PPE) was $50,550 Mil.
Depreciation, Depletion and Amortization(DDA) was $2,056 Mil.
Selling, General & Admin. Expense(SGA) was $4,794 Mil.
Total Current Liabilities was $3,848 Mil.
Long-Term Debt was $14,310 Mil.
Net Income was 1072 + 1144 + 1131 + 979 = $4,326 Mil.
Non Operating Income was 65 + 37 + 26 + 74 = $202 Mil.
Cash Flow from Operations was 1883 + 2058 + 1942 + 1352 = $7,235 Mil.
Accounts Receivable was $1,355 Mil.
Revenue was 4829 + 5208 + 5562 + 5429 = $21,028 Mil.
Gross Profit was 3651 + 3890 + 4187 + 3976 = $15,704 Mil.
Total Current Assets was $5,083 Mil.
Total Assets was $55,772 Mil.
Property, Plant and Equipment(Net PPE) was $49,071 Mil.
Depreciation, Depletion and Amortization(DDA) was $2,023 Mil.
Selling, General & Admin. Expense(SGA) was $5,005 Mil.
Total Current Liabilities was $3,287 Mil.
Long-Term Debt was $14,791 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)
=(1279 / 20244) / (1355 / 21028)
=0.06317921 / 0.06443789
=0.9805

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)
=(15704 / 21028) / (15236 / 20244)
=0.74681377 / 0.75261806
=0.9923

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 - (3588 + 50550) / 55900) / (1 - (5083 + 49071) / 55772)
=0.03152057 / 0.02901097
=1.0865

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
=20244 / 21028
=0.9627

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))
=(2023 / (2023 + 49071)) / (2056 / (2056 + 50550))
=0.03959369 / 0.03908299
=1.0131

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)
=(4794 / 20244) / (5005 / 21028)
=0.23681091 / 0.23801598
=0.9949

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)
=((14310 + 3848) / 55900) / ((14791 + 3287) / 55772)
=0.32483005 / 0.32414115
=1.0021

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
=(4326 - 202 - 7235) / 55900
=-0.0557

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.

Union Pacific Corp has a M-score of -2.76 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.

Union Pacific Corp Annual Data

Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15Dec16
DSRI 0.89050.85161.42461.48211.02650.88791.01221.04310.92561.0148
GMI 1.02890.98790.8840.99671.03550.98010.9860.97560.93790.9805
AQI 0.99910.90291.01491.0550.97731.02771.22490.80990.90561.0587
SGI 1.04531.10360.7871.19951.15281.071.04961.09220.90930.9142
DEPI 0.9741.01030.99760.98730.96150.96751.03050.98760.99941.0173
SGAI 0.96850.87971.15830.88520.94130.93540.97760.96681.11811.0068
LVGI 1.06531.03921.00980.95020.96020.94891.00731.10351.09591.0426
TATA -0.0404-0.0448-0.0357-0.0319-0.0597-0.0493-0.0515-0.0449-0.0512-0.0623
M-score -2.73-2.77-2.53-1.95-2.57-2.73-2.58-2.69-2.99-2.83

Union Pacific Corp Quarterly Data

Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16Dec16Mar17
DSRI 1.04310.94430.88790.9510.92560.98731.04151.02041.01480.9805
GMI 0.95750.94260.96810.95730.95570.9650.95640.97110.98050.9923
AQI 0.80990.820.74180.73150.90560.88710.96181.00741.05871.0865
SGI 1.09221.07411.02280.96990.90930.87750.87130.8780.91420.9627
DEPI 0.98760.9940.99410.99790.99940.99821.00391.01071.01731.0131
SGAI 1.0271.05820.98291.0151.05261.03571.06251.04191.00680.9949
LVGI 1.10351.06531.09681.07161.09591.12781.06531.08111.04261.0021
TATA -0.0449-0.0484-0.056-0.0526-0.0512-0.0555-0.052-0.056-0.0623-0.0557
M-score -2.71-2.83-2.98-2.96-2.97-2.97-2.87-2.88-2.83-2.76
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