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Rite Aid Corp (NYSE:RAD)
Beneish M-Score
-2.48 (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 -2.48 suggests that the company is not a manipulator.

RAD' s 10-Year Beneish M-Score Range
Min: -4.96   Max: 0.51
Current: -2.48

-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 * 1.1322+0.528 * 1.0323+0.404 * 1.033+0.892 * 1.0352+0.115 * 1.0303
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9907+4.679 * -0.0437-0.327 * 0.9621
=-2.48

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

This Year (Nov14) TTM:Last Year (Nov13) TTM:
Accounts Receivable was $997 Mil.
Revenue was 6692.333 + 6522.584 + 6465.531 + 6597.459 = $26,278 Mil.
Gross Profit was 1923.313 + 1894.579 + 1802.979 + 1885.716 = $7,507 Mil.
Total Current Assets was $4,360 Mil.
Total Assets was $7,186 Mil.
Property, Plant and Equipment(Net PPE) was $2,062 Mil.
Depreciation, Depletion and Amortization(DDA) was $411 Mil.
Selling, General & Admin. Expense(SGA) was $6,694 Mil.
Total Current Liabilities was $2,465 Mil.
Long-Term Debt was $5,739 Mil.
Net Income was 104.846 + 127.849 + 41.446 + 55.377 = $330 Mil.
Non Operating Income was -26.759 + 1.715 + 0.37 + 0 = $-25 Mil.
Cash Flow from Operations was 111.728 + 122.483 + 239.748 + 194.128 = $668 Mil.
Accounts Receivable was $850 Mil.
Revenue was 6357.732 + 6278.165 + 6293.057 + 6455.245 = $25,384 Mil.
Gross Profit was 1800.666 + 1816.361 + 1820.991 + 2047.763 = $7,486 Mil.
Total Current Assets was $4,446 Mil.
Total Assets was $7,138 Mil.
Property, Plant and Equipment(Net PPE) was $1,958 Mil.
Depreciation, Depletion and Amortization(DDA) was $405 Mil.
Selling, General & Admin. Expense(SGA) was $6,527 Mil.
Total Current Liabilities was $2,565 Mil.
Long-Term Debt was $5,905 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)
=(996.545 / 26277.907) / (850.249 / 25384.199)
=0.0379233 / 0.03349521
=1.1322

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)
=(1894.579 / 25384.199) / (1923.313 / 26277.907)
=0.29489924 / 0.28566153
=1.0323

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 - (4359.967 + 2062.376) / 7185.986) / (1 - (4446.253 + 1957.584) / 7138.167)
=0.10626837 / 0.10287375
=1.033

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
=26277.907 / 25384.199
=1.0352

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))
=(404.632 / (404.632 + 1957.584)) / (411.263 / (411.263 + 2062.376))
=0.1712934 / 0.16625829
=1.0303

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)
=(6693.986 / 26277.907) / (6526.823 / 25384.199)
=0.25473817 / 0.25712149
=0.9907

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)
=((5739.074 + 2464.674) / 7185.986) / ((5904.673 + 2565.084) / 7138.167)
=1.1416315 / 1.18654509
=0.9621

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
=(329.518 - -24.674 - 668.087) / 7185.986
=-0.0437

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 -2.48 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 own currency.

Rite Aid Corp Annual Data

Feb05Feb06Feb07Feb08Feb09Feb10Feb11Feb12Feb13Feb14
DSRI 0.71230.71491.04731.27190.73191.85781.02971.0120.94371.0157
GMI 0.97421.00831.00970.98761.01951.00671.00161.02060.90241.0045
AQI 1.27431.69950.9890.95180.51340.93940.94330.88910.84080.925
SGI 1.0131.0271.00741.39811.08070.97640.98231.03590.97211.0053
DEPI 0.9890.98110.94590.95060.76460.97760.95121.05621.0491.0485
SGAI 1.01121.01610.99981.04951.01540.96820.99560.97631.03960.9888
LVGI 0.93630.82240.99911.13541.32761.06211.07571.0551.01150.9766
TATA -0.03280.1229-0.0388-0.0985-0.3872-0.0254-0.123-0.0829-0.0816-0.0698
M-score -2.77-1.80-2.62-2.42-4.79-1.87-3.10-2.87-3.06-2.80

Rite Aid Corp Quarterly Data

Aug12Nov12Feb13May13Aug13Nov13Feb14May14Aug14Nov14
DSRI 0.94480.92150.94370.9991.03120.95271.01571.01371.00771.1322
GMI 0.99860.97620.90240.89230.89060.91691.00451.03091.04251.0323
AQI 0.84350.85440.84080.89250.88760.91040.9251.03891.05381.033
SGI 1.03311.02570.97210.96250.96580.97321.00531.01911.02691.0352
DEPI 1.07511.06251.0491.04091.05051.05281.04851.03941.02661.0303
SGAI 1.00571.01661.03961.02151.01341.00450.98880.99240.99290.9907
LVGI 1.06241.04521.01150.98720.96910.97260.97660.97590.96970.9621
TATA -0.0871-0.1061-0.0816-0.0396-0.0363-0.0321-0.057-0.0727-0.074-0.0437
M-score -2.99-3.11-3.06-2.79-2.74-2.76-2.74-2.74-2.74-2.48
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