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Rite Aid Corp (NYSE:RAD)
Beneish M-Score
-2.51 (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 -2.51 suggests that the company is not a manipulator.

RAD' s Beneish M-Score Range Over the Past 10 Years
Min: -4.85   Max: 0.04
Current: -2.51

-4.85
0.04

During the past 13 years, the highest Beneish M-Score of Rite Aid Corp was 0.04. The lowest was -4.85. And the median was -2.75.


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 * 0.9881+0.528 * 1.1102+0.404 * 0.9406+0.892 * 1.1112+0.115 * 0.8931
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9304+4.679 * -0.0339-0.327 * 0.9881
=-2.51

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

This Year (Nov16) TTM:Last Year (Nov15) TTM:
Accounts Receivable was $1,708 Mil.
Revenue was 8089.726 + 8029.806 + 8184.181 + 8270.136 = $32,574 Mil.
Gross Profit was 1894.86 + 1916.743 + 1894.3 + 2041.556 = $7,747 Mil.
Total Current Assets was $5,017 Mil.
Total Assets was $11,659 Mil.
Property, Plant and Equipment(Net PPE) was $2,291 Mil.
Depreciation, Depletion and Amortization(DDA) was $560 Mil.
Selling, General & Admin. Expense(SGA) was $7,156 Mil.
Total Current Liabilities was $3,072 Mil.
Long-Term Debt was $7,252 Mil.
Net Income was 15.01 + 14.773 + -4.588 + 65.617 = $91 Mil.
Non Operating Income was -0.501 + -0.174 + -6.837 + 0.348 = $-7 Mil.
Cash Flow from Operations was 152.587 + -147.078 + 159.944 + 327.865 = $493 Mil.
Accounts Receivable was $1,555 Mil.
Revenue was 8154.184 + 7664.776 + 6647.561 + 6847.929 = $29,314 Mil.
Gross Profit was 2002.879 + 1922.291 + 1859.53 + 1955.861 = $7,741 Mil.
Total Current Assets was $4,805 Mil.
Total Assets was $11,718 Mil.
Property, Plant and Equipment(Net PPE) was $2,264 Mil.
Depreciation, Depletion and Amortization(DDA) was $481 Mil.
Selling, General & Admin. Expense(SGA) was $6,921 Mil.
Total Current Liabilities was $3,163 Mil.
Long-Term Debt was $7,338 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)
=(1707.648 / 32573.849) / (1555.352 / 29314.45)
=0.05242389 / 0.05305752
=0.9881

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)
=(7740.561 / 29314.45) / (7747.459 / 32573.849)
=0.26405275 / 0.23784291
=1.1102

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 - (5017.168 + 2291.459) / 11658.926) / (1 - (4805.167 + 2264.251) / 11718.08)
=0.37313034 / 0.39670851
=0.9406

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
=32573.849 / 29314.45
=1.1112

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))
=(481.207 / (481.207 + 2264.251)) / (559.514 / (559.514 + 2291.459))
=0.17527385 / 0.1962537
=0.8931

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)
=(7155.644 / 32573.849) / (6921.385 / 29314.45)
=0.2196745 / 0.2361083
=0.9304

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)
=((7252.229 + 3071.538) / 11658.926) / ((7338.345 + 3162.997) / 11718.08)
=0.88548182 / 0.89616575
=0.9881

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
=(90.812 - -7.164 - 493.318) / 11658.926
=-0.0339

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 -2.51 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.

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

Aug14Nov14Feb15May15Aug15Nov15Feb16May16Aug16Nov16
DSRI 1.00771.13220.99451.02461.82721.39911.40871.43310.83320.9881
GMI 1.04251.03231.00450.99481.03481.08181.12171.17331.14281.1102
AQI 1.05381.0332.77582.17863.59513.73311.41411.62630.96530.9406
SGI 1.02691.03521.03931.03941.07361.11561.15861.20831.17181.1112
DEPI 1.02661.03031.02941.03380.99520.94860.89990.85630.87020.8931
SGAI 0.99290.99070.9820.98470.95990.92690.9040.87130.89370.9304
LVGI 0.96970.96210.76510.77770.77940.7850.97630.96710.98130.9881
TATA -0.0772-0.0470.16670.12510.11650.0948-0.0701-0.0537-0.0451-0.0339
M-score -2.75-2.50-0.87-1.280.04-0.34-2.05-1.79-2.62-2.51
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