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Rite Aid Corp (NYSE:RAD)
Beneish M-Score
-2.05 (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.

Rite Aid Corp has a M-score of -2.05 signals that the company is a manipulator.

RAD' s Beneish M-Score Range Over the Past 10 Years
Min: -4.63   Max: -0.17
Current: -2.05

-4.63
-0.17

During the past 13 years, the highest Beneish M-Score of Rite Aid Corp was -0.17. The lowest was -4.63. And the median was -2.68.


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 Rite Aid 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 * 1.4087+0.528 * 1.1217+0.404 * 1.4141+0.892 * 1.1586+0.115 * 0.8999
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.904+4.679 * -0.0718-0.327 * 0.9763
=-2.05

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.

This Year (Feb16) TTM:Last Year (Feb15) TTM:
Accounts Receivable was $1,601 Mil.
Revenue was 8270.136 + 8154.184 + 7664.776 + 6647.561 = $30,737 Mil.
Gross Profit was 2041.556 + 2002.879 + 1922.291 + 1859.53 = $7,826 Mil.
Total Current Assets was $4,551 Mil.
Total Assets was $11,277 Mil.
Property, Plant and Equipment(Net PPE) was $2,249 Mil.
Depreciation, Depletion and Amortization(DDA) was $509 Mil.
Selling, General & Admin. Expense(SGA) was $7,013 Mil.
Total Current Liabilities was $2,997 Mil.
Long-Term Debt was $6,967 Mil.
Net Income was 65.617 + 59.543 + 21.469 + 18.836 = $165 Mil.
Non Operating Income was 22.018 + -10.342 + -33.486 + -0.039 = $-22 Mil.
Cash Flow from Operations was 327.865 + 327.965 + -26.263 + 367.835 = $997 Mil.
Accounts Receivable was $981 Mil.
Revenue was 6847.929 + 6692.333 + 6522.584 + 6465.531 = $26,528 Mil.
Gross Profit was 1955.861 + 1923.313 + 1894.579 + 1802.979 = $7,577 Mil.
Total Current Assets was $4,222 Mil.
Total Assets was $8,777 Mil.
Property, Plant and Equipment(Net PPE) was $2,091 Mil.
Depreciation, Depletion and Amortization(DDA) was $417 Mil.
Selling, General & Admin. Expense(SGA) was $6,696 Mil.
Total Current Liabilities was $2,485 Mil.
Long-Term Debt was $5,459 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)
=(1601.008 / 30736.657) / (980.904 / 26528.377)
=0.0520879 / 0.03697565
=1.4087

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)
=(2002.879 / 26528.377) / (2041.556 / 30736.657)
=0.28560858 / 0.25462288
=1.1217

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 - (4550.727 + 2249.287) / 11277.01) / (1 - (4221.758 + 2091.369) / 8777.425)
=0.39700204 / 0.28075409
=1.4141

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
=30736.657 / 26528.377
=1.1586

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))
=(416.628 / (416.628 + 2091.369)) / (509.212 / (509.212 + 2249.287))
=0.16611982 / 0.18459749
=0.8999

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)
=(7013.346 / 30736.657) / (6695.642 / 26528.377)
=0.2281753 / 0.25239546
=0.904

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)
=((6967.288 + 2996.895) / 11277.01) / ((5458.74 + 2485) / 8777.425)
=0.88358377 / 0.90501941
=0.9763

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
=(165.465 - -21.849 - 997.402) / 11277.01
=-0.0718

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.

Rite Aid Corp has a M-score of -2.05 signals that the company is likely to 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 own currency.

Rite Aid Corp Annual Data

Feb07Feb08Feb09Feb10Feb11Feb12Feb13Feb14Feb15Feb16
DSRI 1.04731.27190.73191.85781.02971.0120.94371.01570.99451.4087
GMI 1.00970.98761.01951.00671.00161.02060.90241.00451.00451.1217
AQI 0.9890.95180.51340.93940.94330.88910.84080.9252.77581.4141
SGI 1.00741.39811.08070.97640.98231.03590.97211.00531.03931.1586
DEPI 0.94590.95060.76460.97760.95121.05621.0491.04851.02940.8999
SGAI 0.99981.04951.01540.96820.99560.97631.03960.98880.9820.904
LVGI 0.99911.13541.32761.06211.07571.0551.01150.97660.76510.9763
TATA -0.0388-0.0985-0.3872-0.0254-0.123-0.0829-0.0816-0.05850.168-0.0705
M-score -2.62-2.42-4.79-1.87-3.10-2.87-3.06-2.75-0.86-2.05

Rite Aid Corp Quarterly Data

Nov13Feb14May14Aug14Nov14Feb15May15Aug15Nov15Feb16
DSRI 0.95271.01571.01371.00771.13220.99451.02461.82721.39911.4087
GMI 0.91691.00451.03091.04251.03231.00450.99481.03481.08181.1217
AQI 0.91040.9251.03891.05381.0332.77582.17863.59513.73311.4141
SGI 0.97321.00531.01911.02691.03521.03931.03941.07361.11561.1586
DEPI 1.05281.04851.03941.02661.03031.02941.03380.99520.94860.8999
SGAI 1.00450.98880.99240.99290.99070.9820.98470.95990.92690.904
LVGI 0.97260.97660.97590.96970.96210.76510.77770.77940.7850.9763
TATA -0.0318-0.0601-0.0759-0.0772-0.0470.16670.12470.11610.0949-0.0718
M-score -2.76-2.75-2.76-2.75-2.50-0.87-1.290.04-0.34-2.05
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