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Rite Aid Corp (NYSE:RAD)
Beneish M-Score
-2.73 (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 -2.73 suggests that the company is not a manipulator.

RAD' s 10-Year Beneish M-Score Range
Min: -4.96   Max: 0.51
Current: -2.73

-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 * 1.0077+0.528 * 1.0425+0.404 * 1.0538+0.892 * 1.0269+0.115 * 1.0266
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9929+4.679 * -0.0733-0.327 * 0.9697
=-2.73

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

This Year (Aug14) TTM:Last Year (Aug13) TTM:
Accounts Receivable was $955 Mil.
Revenue was 6522.584 + 6465.531 + 6597.459 + 6357.732 = $25,943 Mil.
Gross Profit was 1894.579 + 1802.979 + 1885.716 + 1800.666 = $7,384 Mil.
Total Current Assets was $4,194 Mil.
Total Assets was $6,959 Mil.
Property, Plant and Equipment(Net PPE) was $2,007 Mil.
Depreciation, Depletion and Amortization(DDA) was $408 Mil.
Selling, General & Admin. Expense(SGA) was $6,634 Mil.
Total Current Liabilities was $2,411 Mil.
Long-Term Debt was $5,639 Mil.
Net Income was 127.849 + 41.446 + 55.377 + 71.548 = $296 Mil.
Non Operating Income was 1.715 + -4.478 + -0.412 + 9.06 = $6 Mil.
Cash Flow from Operations was 122.483 + 239.748 + 194.128 + 244.006 = $800 Mil.
Accounts Receivable was $923 Mil.
Revenue was 6278.165 + 6293.057 + 6455.245 + 6237.847 = $25,264 Mil.
Gross Profit was 1816.361 + 1820.991 + 2047.763 + 1811.321 = $7,496 Mil.
Total Current Assets was $4,491 Mil.
Total Assets was $7,169 Mil.
Property, Plant and Equipment(Net PPE) was $1,937 Mil.
Depreciation, Depletion and Amortization(DDA) was $406 Mil.
Selling, General & Admin. Expense(SGA) was $6,507 Mil.
Total Current Liabilities was $2,547 Mil.
Long-Term Debt was $6,004 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)
=(954.785 / 25943.306) / (922.648 / 25264.314)
=0.03680275 / 0.03651981
=1.0077

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)
=(1802.979 / 25264.314) / (1894.579 / 25943.306)
=0.29672035 / 0.28461831
=1.0425

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 - (4194.027 + 2006.872) / 6959.344) / (1 - (4491.033 + 1936.577) / 7168.99)
=0.10898225 / 0.10341485
=1.0538

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
=25943.306 / 25264.314
=1.0269

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))
=(406.234 / (406.234 + 1936.577)) / (407.837 / (407.837 + 2006.872))
=0.17339598 / 0.16889696
=1.0266

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)
=(6633.848 / 25943.306) / (6506.722 / 25264.314)
=0.25570558 / 0.25754596
=0.9929

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)
=((5639.216 + 2410.976) / 6959.344) / ((6004.346 + 2547.405) / 7168.99)
=1.15674581 / 1.19288087
=0.9697

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
=(296.22 - 5.885 - 800.365) / 6959.344
=-0.0733

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 -2.73 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 -0.03280.1229-0.0388-0.0985-0.3872-0.0254-0.123-0.0829-0.0816-0.0585
M-score -2.77-1.80-2.62-2.42-4.79-1.87-3.10-2.87-3.06-2.75

Rite Aid Corp Quarterly Data

May12Aug12Nov12Feb13May13Aug13Nov13Feb14May14Aug14
DSRI 0.91650.94480.92150.94370.9991.03120.95271.01571.01371.0077
GMI 1.01190.99860.97620.90240.89230.89060.91691.00451.03091.0425
AQI 0.8460.84350.85440.84080.89250.88760.91040.9251.03891.0538
SGI 1.03921.03311.02570.97210.96250.96580.97321.00531.01911.0269
DEPI 1.08151.07511.06251.0491.04091.05051.05281.04851.03941.0266
SGAI 0.99411.00571.01661.03961.02151.01341.00450.98880.99240.9929
LVGI 1.06421.06241.04521.01150.98720.96910.97260.97660.97590.9697
TATA -0.0807-0.0871-0.1061-0.0816-0.0396-0.0363-0.0321-0.0569-0.072-0.0733
M-score -2.97-2.99-3.11-3.06-2.79-2.74-2.76-2.74-2.74-2.73
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