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Rite Aid Corp (NYSE:RAD)
Beneish M-Score
-0.84 (As of Today)

Warning Sign:

Beneish M-Score -0.84 higher than -2.22, which implies that it might have manipulated its financial results.

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 -0.84 signals that the company is a manipulator.

RAD' s 10-Year Beneish M-Score Range
Min: -4.79   Max: 0.07
Current: -0.84

-4.79
0.07

During the past 13 years, the highest Beneish M-Score of Rite Aid Corp was 0.07. The lowest was -4.79. 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 * 0.9945+0.528 * 1.0045+0.404 * 2.8447+0.892 * 1.0393+0.115 * 1.0294
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.982+4.679 * 0.1656-0.327 * 0.7658
=-0.84

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

This Year (Feb15) TTM:Last Year (Feb14) TTM:
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 $8,863 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 $5,545 Mil.
Net Income was 1835.032 + 104.846 + 127.849 + 41.446 = $2,109 Mil.
Non Operating Income was 21.92 + -26.759 + 1.715 + -4.478 = $-8 Mil.
Cash Flow from Operations was 175 + 111.728 + 122.483 + 239.748 = $649 Mil.
Accounts Receivable was $949 Mil.
Revenue was 6597.459 + 6357.732 + 6278.165 + 6293.057 = $25,526 Mil.
Gross Profit was 1885.716 + 1800.666 + 1816.361 + 1820.991 = $7,324 Mil.
Total Current Assets was $4,285 Mil.
Total Assets was $6,945 Mil.
Property, Plant and Equipment(Net PPE) was $1,957 Mil.
Depreciation, Depletion and Amortization(DDA) was $404 Mil.
Selling, General & Admin. Expense(SGA) was $6,561 Mil.
Total Current Liabilities was $2,507 Mil.
Long-Term Debt was $5,708 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)
=(980.904 / 26528.377) / (949.062 / 25526.413)
=0.03697565 / 0.03717961
=0.9945

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)
=(1923.313 / 25526.413) / (1955.861 / 26528.377)
=0.28690807 / 0.28560858
=1.0045

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 - (4221.758 + 2091.369) / 8863.252) / (1 - (4285.125 + 1957.329) / 6944.871)
=0.28771889 / 0.10114184
=2.8447

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
=26528.377 / 25526.413
=1.0393

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))
=(403.741 / (403.741 + 1957.329)) / (416.628 / (416.628 + 2091.369))
=0.17099917 / 0.16611982
=1.0294

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)
=(6695.642 / 26528.377) / (6561.162 / 25526.413)
=0.25239546 / 0.25703423
=0.982

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)
=((5544.567 + 2485) / 8863.252) / ((5707.969 + 2507.452) / 6944.871)
=0.90593915 / 1.18294796
=0.7658

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
=(2109.173 - -7.602 - 648.959) / 8863.252
=0.1656

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 -0.84 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

Nov12Feb13May13Aug13Nov13Feb14May14Aug14Nov14Feb15
DSRI 0.92150.94370.9991.03120.95271.01571.01371.00771.13220.9945
GMI 0.97620.90240.89230.89060.91691.00451.03091.04251.03231.0045
AQI 0.85440.84080.89250.88760.91040.9251.03891.05381.0332.8447
SGI 1.02570.97210.96250.96580.97321.00531.01911.02691.03521.0393
DEPI 1.06251.0491.04091.05051.05281.04851.03941.02661.03031.0294
SGAI 1.01661.03961.02151.01341.00450.98880.99240.99290.99070.982
LVGI 1.04521.01150.98720.96910.97260.97660.97590.96970.96210.7658
TATA -0.1061-0.0816-0.0416-0.0355-0.0313-0.0561-0.0703-0.0733-0.04290.1656
M-score -3.11-3.06-2.80-2.74-2.76-2.74-2.73-2.73-2.48-0.84
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