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Royal Dutch Shell PLC (NYSE:RDS.A)
Beneish M-Score
-2.55 (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 -2.65 suggests that the company is not a manipulator.

RDS.A' s Beneish M-Score Range Over the Past 10 Years
Min: -3.17   Max: -1.53
Current: -2.55

-3.17
-1.53

During the past 13 years, the highest Beneish M-Score of Royal Dutch Shell PLC was -1.53. 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 * 1.4095+0.528 * 1.0161+0.404 * 1.202+0.892 * 0.6902+0.115 * 0.8244
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.4003+4.679 * -0.0518-0.327 * 1.0797
=-2.65

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

This Year (Jun16) TTM:Last Year (Jun15) TTM:
Accounts Receivable was $49,547 Mil.
Revenue was 60271 + 49732 + 60176 + 69184 = $239,363 Mil.
Gross Profit was 11833 + 9681 + 9495 + 10153 = $41,162 Mil.
Total Current Assets was $85,395 Mil.
Total Assets was $417,441 Mil.
Property, Plant and Equipment(Net PPE) was $242,907 Mil.
Depreciation, Depletion and Amortization(DDA) was $29,681 Mil.
Selling, General & Admin. Expense(SGA) was $12,319 Mil.
Total Current Liabilities was $77,465 Mil.
Long-Term Debt was $79,466 Mil.
Net Income was 1175 + 484 + 939 + -7416 = $-4,818 Mil.
Non Operating Income was -910 + -389 + -1237 + -285 = $-2,821 Mil.
Cash Flow from Operations was 2292 + 661 + 5423 + 11231 = $19,607 Mil.
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.



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)
=(49547 / 239363) / (50929 / 346787)
=0.20699523 / 0.1468596
=1.4095

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)
=(60593 / 346787) / (41162 / 239363)
=0.17472685 / 0.17196476
=1.0161

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 - (85395 + 242907) / 417441) / (1 - (100395 + 192633) / 356328)
=0.21353676 / 0.17764532
=1.202

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
=239363 / 346787
=0.6902

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))
=(18997 / (18997 + 192633)) / (29681 / (29681 + 242907))
=0.08976516 / 0.10888594
=0.8244

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)
=(12319 / 239363) / (12746 / 346787)
=0.05146577 / 0.03675455
=1.4003

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)
=((79466 + 77465) / 417441) / ((45575 + 78495) / 356328)
=0.37593576 / 0.34819043
=1.0797

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
=(-4818 - -2821 - 19607) / 417441
=-0.0518

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 -2.65 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

Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15
DSRI 0.44871.22441.46491.19440.89090.88530.50871.0190.77381.1503
GMI 1.0071.05490.93340.92961.02641.02791.0191.04890.98910.9452
AQI 1.16141.08210.97671.15180.94620.93660.92890.96440.98961.0909
SGI 1.03951.11581.32370.60541.32621.28120.99420.95410.93850.6309
DEPI 1.08390.96641.05761.09771.00471.23111.02340.77580.89260.8857
SGAI 0.95330.89650.76841.70290.67170.72181.01321.06331.0141.3569
LVGI 0.87171.0781.06640.9371.05680.9430.91840.99970.97391.0319
TATA -0.0484-0.0413-0.0443-0.024-0.02190.0012-0.0395-0.0643-0.0738-0.0711
M-score -3.05-2.31-1.99-2.83-2.36-2.25-3.11-2.83-3.10-3.08

Royal Dutch Shell PLC Quarterly Data

Mar14Jun14Sep14Dec14Mar15Jun15Sep15Dec15Mar16Jun16
DSRI 0.99221.07150.99040.9790.95431.02921.21921.2411.56761.4095
GMI 1.06311.02790.98640.98910.96261.00571.01850.94520.99611.0161
AQI 1.07841.00671.01480.98960.96891.00331.02251.09091.20971.202
SGI 0.96350.97690.95310.93850.85080.75870.68240.63090.6520.6902
DEPI 0.70030.85980.82130.89261.09621.25720.91660.88570.99430.8244
SGAI 1.04721.02321.04111.0141.08661.14941.2511.35691.39021.4003
LVGI 1.0251.04540.98460.97390.92470.96471.05911.03191.07961.0797
TATA -0.0794-0.053-0.0613-0.0738-0.0523-0.052-0.0844-0.0711-0.0554-0.0518
M-score -2.88-2.70-2.84-2.92-2.91-2.89-3.01-3.00-2.54-2.65
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