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GuruFocus has detected 3 Warning Signs with United Rentals Inc $URI.
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United Rentals Inc (NYSE:URI)
Beneish M-Score
-3.01 (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 -3.01 suggests that the company is not a manipulator.

URI' s Beneish M-Score Range Over the Past 10 Years
Min: -4.82   Max: -0.73
Current: -3.01

-4.82
-0.73

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.


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 * 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
=-3.01

* 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 $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

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)
=(854 / 5808) / (833 / 5812)
=0.14703857 / 0.14332416
=1.0259

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)
=(2456 / 5812) / (2417 / 5808)
=0.42257398 / 0.41615014
=1.0154

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 - (1320 + 6533) / 11822) / (1 - (1182 + 6467) / 11784)
=0.33572999 / 0.35089952
=0.9568

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
=5808 / 5812
=0.9993

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))
=0.16198004 / 0.16006686
=1.012

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)
=0.12654959 / 0.12216105
=1.0359

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)
=0.68423279 / 0.7155465
=0.9562

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
=(583 - 3 - 1972) / 11822
=-0.1177

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.


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 1.00581.02521.32760.87950.85520.89220.96130.93741.00341.0223
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 0.95261.02461.05270.94820.95010.91620.90721.02910.92061.0166
LVGI 0.90641.62680.98551.00140.95740.86530.95381.040.99990.9608
TATA -0.1053-0.3498-0.1298-0.1302-0.1241-0.0598-0.1041-0.136-0.1177-0.1161
M-score -2.92-4.72-3.09-3.02-2.78-1.08-2.96-3.02-3.05-3.02

United Rentals Inc Quarterly Data

Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16Dec16Mar17
DSRI 1.0190.97480.94590.98440.96690.9840.97780.95020.99871.0259
GMI 0.93740.94550.95690.96871.00341.01941.03631.04321.02231.0154
AQI 0.99661.00220.9310.93890.95180.97640.97930.96920.97160.9568
SGI 1.14731.15681.11981.07311.02320.99830.99180.98360.99050.9993
DEPI 1.01931.00190.98210.98770.98930.9870.97920.99380.99781.012
SGAI 1.02911.02540.98950.97250.92060.92250.94580.97561.01661.0359
LVGI 1.041.05091.01741.01470.99990.97250.97040.96290.96080.9562
TATA -0.136-0.1639-0.1628-0.1721-0.1177-0.1163-0.1144-0.1215-0.1161-0.1177
M-score -3.02-3.18-3.24-3.28-3.05-3.02-3.02-3.08-3.02-3.01
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