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Rite Aid Corp (NYSE:RAD)
Beneish M-Score
-1.29 (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 -1.29 signals that the company is a manipulator.

RAD' s 10-Year Beneish M-Score Range
Min: -4.96   Max: 0.51
Current: -1.29

-4.96
0.51

During the past 13 years, the highest Beneish M-Score of Rite Aid Corp was 0.51. The lowest was -4.96. And the median was -2.74.


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 * 1.0246+0.528 * 0.9948+0.404 * 2.1786+0.892 * 1.0394+0.115 * 1.0338
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9847+4.679 * 0.1247-0.327 * 0.7777
=-1.29

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

This Year (May15) TTM:Last Year (May14) TTM:
Accounts Receivable was $970 Mil.
Revenue was 6647.561 + 6847.929 + 6692.333 + 6522.584 = $26,710 Mil.
Gross Profit was 1859.53 + 1955.861 + 1923.313 + 1894.579 = $7,633 Mil.
Total Current Assets was $5,831 Mil.
Total Assets was $10,530 Mil.
Property, Plant and Equipment(Net PPE) was $2,144 Mil.
Depreciation, Depletion and Amortization(DDA) was $423 Mil.
Selling, General & Admin. Expense(SGA) was $6,751 Mil.
Total Current Liabilities was $2,405 Mil.
Long-Term Debt was $7,200 Mil.
Net Income was 18.836 + 1835.032 + 104.846 + 127.849 = $2,087 Mil.
Non Operating Income was -0.039 + 21.92 + -26.759 + 1.715 = $-3 Mil.
Cash Flow from Operations was 367.835 + 175 + 111.728 + 122.483 = $777 Mil.
Accounts Receivable was $911 Mil.
Revenue was 6465.531 + 6597.459 + 6357.732 + 6278.165 = $25,699 Mil.
Gross Profit was 1802.979 + 1885.716 + 1800.666 + 1816.361 = $7,306 Mil.
Total Current Assets was $4,199 Mil.
Total Assets was $6,947 Mil.
Property, Plant and Equipment(Net PPE) was $1,974 Mil.
Depreciation, Depletion and Amortization(DDA) was $406 Mil.
Selling, General & Admin. Expense(SGA) was $6,596 Mil.
Total Current Liabilities was $2,556 Mil.
Long-Term Debt was $5,592 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)
=(969.725 / 26710.407) / (910.624 / 25698.887)
=0.03630514 / 0.03543438
=1.0246

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)
=(1955.861 / 25698.887) / (1859.53 / 26710.407)
=0.28428165 / 0.28577936
=0.9948

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 - (5830.847 + 2143.575) / 10529.774) / (1 - (4198.536 + 1974.204) / 6946.517)
=0.24267871 / 0.11139064
=2.1786

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
=26710.407 / 25698.887
=1.0394

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))
=(405.6 / (405.6 + 1974.204)) / (423.172 / (423.172 + 2143.575))
=0.1704342 / 0.16486705
=1.0338

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)
=(6750.873 / 26710.407) / (6596.255 / 25698.887)
=0.25274317 / 0.25667473
=0.9847

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)
=((7199.832 + 2404.967) / 10529.774) / ((5591.568 + 2555.531) / 6946.517)
=0.91215623 / 1.17283223
=0.7777

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
=(2086.563 - -3.163 - 777.046) / 10529.774
=0.1247

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 -1.29 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

Feb06Feb07Feb08Feb09Feb10Feb11Feb12Feb13Feb14Feb15
DSRI 0.71491.04731.27190.73191.85781.02971.0120.94371.01570.9945
GMI 1.00831.00970.98761.01951.00671.00161.02060.90241.00451.0045
AQI 1.69950.9890.95180.51340.93940.94330.88910.84080.9252.8447
SGI 1.0271.00741.39811.08070.97640.98231.03590.97211.00531.0393
DEPI 0.98110.94590.95060.76460.97760.95121.05621.0491.04851.0294
SGAI 1.01610.99981.04951.01540.96820.99560.97631.03960.98880.982
LVGI 0.82240.99911.13541.32761.06211.07571.0551.01150.97660.7658
TATA 0.1229-0.0388-0.0985-0.3872-0.0254-0.123-0.0829-0.0816-0.05850.1664
M-score -1.80-2.62-2.42-4.79-1.87-3.10-2.87-3.06-2.75-0.84

Rite Aid Corp Quarterly Data

Feb13May13Aug13Nov13Feb14May14Aug14Nov14Feb15May15
DSRI 0.94370.9991.03120.95271.01571.01371.00771.13220.99451.0246
GMI 0.90240.89230.89060.91691.00451.03091.04251.03231.00450.9948
AQI 0.84080.89250.88760.91040.9251.03891.05381.0332.84472.1786
SGI 0.97210.96250.96580.97321.00531.01911.02691.03521.03931.0394
DEPI 1.0491.04091.05051.05281.04851.03941.02661.03031.02941.0338
SGAI 1.03961.02151.01341.00450.98880.99240.99290.99070.9820.9847
LVGI 1.01150.98720.96910.97260.97660.97590.96970.96210.76580.7777
TATA -0.0816-0.0396-0.0363-0.0318-0.0601-0.0759-0.0772-0.0470.16510.1247
M-score -3.06-2.79-2.74-2.76-2.75-2.76-2.75-2.50-0.85-1.29
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