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Rite Aid Corp (NYSE:RAD)
Beneish M-Score
-0.34 (As of Today)

Warning Sign:

Beneish M-Score -0.34 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 -0.34 signals that the company is a manipulator.

RAD' s Beneish M-Score Range Over the Past 10 Years
Min: -4.85   Max: 0.04
Current: -0.34

-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 -2.74.


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 * 1.3991+0.528 * 1.0818+0.404 * 3.7331+0.892 * 1.1156+0.115 * 0.9486
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9269+4.679 * 0.0949-0.327 * 0.785
=-0.34

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

This Year (Nov15) TTM:Last Year (Nov14) TTM:
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.
Net Income was 59.543 + 21.469 + 18.836 + 1835.032 = $1,935 Mil.
Non Operating Income was -10.342 + -33.486 + -0.039 + 21.92 = $-22 Mil.
Cash Flow from Operations was 327.965 + -26.263 + 367.835 + 175 = $845 Mil.
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.



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)
=(1555.352 / 29314.45) / (996.545 / 26277.907)
=0.05305752 / 0.0379233
=1.3991

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)
=(1922.291 / 26277.907) / (2002.879 / 29314.45)
=0.28566153 / 0.26405275
=1.0818

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 - (4805.167 + 2264.251) / 11718.08) / (1 - (4359.967 + 2062.376) / 7185.986)
=0.39670851 / 0.10626837
=3.7331

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
=29314.45 / 26277.907
=1.1156

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))
=(411.263 / (411.263 + 2062.376)) / (481.207 / (481.207 + 2264.251))
=0.16625829 / 0.17527385
=0.9486

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)
=(6921.385 / 29314.45) / (6693.986 / 26277.907)
=0.2361083 / 0.25473817
=0.9269

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)
=((7338.345 + 3162.997) / 11718.08) / ((5739.074 + 2464.674) / 7185.986)
=0.89616575 / 1.1416315
=0.785

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
=(1934.88 - -21.947 - 844.537) / 11718.08
=0.0949

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 -0.34 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 1.04081.27980.73191.85781.02971.0120.94371.01570.99451.4087
GMI 1.01010.98731.01951.00671.00161.02060.90241.00451.00451.1217
AQI 0.9890.95180.51340.93940.94330.88910.84080.9252.84471.3798
SGI 1.01371.38951.08070.97640.98231.03590.97211.00531.03931.1586
DEPI 0.94590.95060.76460.97760.95121.05621.0491.04851.02940.8999
SGAI 1.00091.04831.01540.96820.99560.97631.03960.98880.9820.904
LVGI 0.99911.13541.32761.06211.07571.0551.01150.97660.76580.9753
TATA -0.0318-0.0985-0.1345-0.0254-0.123-0.0829-0.0816-0.05850.1664-0.0705
M-score -2.58-2.42-3.61-1.87-3.10-2.87-3.06-2.75-0.84-2.06

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 0.91040.9251.03891.05381.0332.84472.17863.59513.73311.3798
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 0.97260.97660.97590.96970.96210.76580.77770.77940.7850.9753
TATA -0.0471-0.0724-0.0703-0.0733-0.04290.16560.12470.11610.0949-0.0718
M-score -2.83-2.81-2.73-2.73-2.48-0.84-1.290.04-0.34-2.07
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