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Royal Dutch Shell PLC (NYSE:RDS.A)
Beneish M-Score
-2.82 (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.

Royal Dutch Shell PLC has a M-score of -2.89 suggests that the company is not a manipulator.

RDS.A' s 10-Year Beneish M-Score Range
Min: -3.17   Max: -1.74
Current: -2.82

-3.17
-1.74

During the past 13 years, the highest Beneish M-Score of Royal Dutch Shell PLC was -1.74. The lowest was -3.17. And the median was -2.72.


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 Royal Dutch Shell PLC 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 * 1.0292+0.528 * 1.0057+0.404 * 1.0033+0.892 * 0.7587+0.115 * 1.2572
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.1494+4.679 * -0.052-0.327 * 0.9647
=-2.89

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

This Year (Jun15) TTM:Last Year (Jun14) TTM:
Accounts Receivable was $50,929 Mil.
Revenue was 73950 + 68846 + 94166 + 109825 = $346,787 Mil.
Gross Profit was 15003 + 14766 + 13061 + 17763 = $60,593 Mil.
Total Current Assets was $100,395 Mil.
Total Assets was $356,328 Mil.
Property, Plant and Equipment(Net PPE) was $192,633 Mil.
Depreciation, Depletion and Amortization(DDA) was $18,997 Mil.
Selling, General & Admin. Expense(SGA) was $12,746 Mil.
Total Current Liabilities was $78,495 Mil.
Long-Term Debt was $45,575 Mil.
Net Income was 3986 + 4430 + 595 + 4463 = $13,474 Mil.
Non Operating Income was -412 + -1735 + -974 + -462 = $-3,583 Mil.
Cash Flow from Operations was 6050 + 7106 + 9608 + 12811 = $35,575 Mil.
Accounts Receivable was $65,225 Mil.
Revenue was 115274 + 112079 + 111479 + 118258 = $457,090 Mil.
Gross Profit was 22139 + 21065 + 18114 + 19000 = $80,318 Mil.
Total Current Assets was $112,005 Mil.
Total Assets was $370,716 Mil.
Property, Plant and Equipment(Net PPE) was $193,069 Mil.
Depreciation, Depletion and Amortization(DDA) was $24,561 Mil.
Selling, General & Admin. Expense(SGA) was $14,616 Mil.
Total Current Liabilities was $94,904 Mil.
Long-Term Debt was $38,901 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)
=(50929 / 346787) / (65225 / 457090)
=0.1468596 / 0.14269619
=1.0292

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)
=(14766 / 457090) / (15003 / 346787)
=0.17571594 / 0.17472685
=1.0057

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 - (100395 + 192633) / 356328) / (1 - (112005 + 193069) / 370716)
=0.17764532 / 0.17706816
=1.0033

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
=346787 / 457090
=0.7587

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))
=(24561 / (24561 + 193069)) / (18997 / (18997 + 192633))
=0.11285668 / 0.08976516
=1.2572

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)
=(12746 / 346787) / (14616 / 457090)
=0.03675455 / 0.0319762
=1.1494

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)
=((45575 + 78495) / 356328) / ((38901 + 94904) / 370716)
=0.34819043 / 0.36093667
=0.9647

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
=(13474 - -3583 - 35575) / 356328
=-0.052

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.

Royal Dutch Shell PLC has a M-score of -2.89 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.

Royal Dutch Shell PLC Annual Data

Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14
DSRI 1.53860.44871.22441.46491.19440.89090.88530.50871.0190.7738
GMI 0.91781.0071.05490.91170.91521.06741.02791.0191.04890.9891
AQI 0.77611.16141.08210.97671.15180.94620.93660.92890.96440.9896
SGI 1.15151.03951.11581.32370.60541.32621.28120.99420.95410.9385
DEPI 1.05911.08390.96641.05761.09771.00471.23111.02340.77580.8926
SGAI 0.96450.95330.89650.76841.70290.67170.72181.01321.06331.014
LVGI 1.24030.87171.0781.06640.9371.05680.9430.91840.99970.9739
TATA -0.0543-0.055-0.0456-0.0443-0.024-0.0219-0.0154-0.0524-0.0643-0.0738
M-score -2.30-3.08-2.33-2.00-2.84-2.34-2.32-3.17-2.83-3.10

Royal Dutch Shell PLC Quarterly Data

Mar13Jun13Sep13Dec13Mar14Jun14Sep14Dec14Mar15Jun15
DSRI 0.88080.91420.89551.65870.99221.07150.99040.9790.95431.0292
GMI 0.99230.9451.01021.04891.06311.02790.98640.98910.96261.0057
AQI 0.80710.82720.82350.96441.07841.00671.01480.98960.96891.0033
SGI 0.95950.95740.98430.95410.96350.97690.95310.93850.85080.7587
DEPI 1.00120.84830.83160.77580.70030.85980.82130.89261.09621.2572
SGAI 1.02361.06531.0171.06331.04721.02321.04111.0141.08661.1494
LVGI 0.92850.94720.96580.99971.0251.04540.98460.97390.92470.9647
TATA -0.0492-0.0582-0.0683-0.0643-0.0794-0.053-0.0613-0.0738-0.0523-0.052
M-score -2.92-2.98-2.99-2.24-2.88-2.70-2.84-2.92-2.91-2.89
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