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Royal Dutch Shell PLC (NYSE:RDS.A)
Beneish M-Score
-2.40 (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 -1.79 signals that the company is a manipulator.

RDS.A' s Beneish M-Score Range Over the Past 10 Years
Min: -3.17   Max: -1.53
Current: -2.4

-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 -2.70.


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 * 2.5557+0.528 * 0.9452+0.404 * 1.0909+0.892 * 0.6309+0.115 * 0.8857
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.3569+4.679 * -0.0711-0.327 * 1.0319
=-1.79

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

This Year (Dec15) TTM:Last Year (Dec14) TTM:
Accounts Receivable was $45,784 Mil.
Revenue was $272,156 Mil.
Gross Profit was $49,417 Mil.
Total Current Assets was $93,358 Mil.
Total Assets was $340,157 Mil.
Property, Plant and Equipment(Net PPE) was $182,838 Mil.
Depreciation, Depletion and Amortization(DDA) was $26,714 Mil.
Selling, General & Admin. Expense(SGA) was $11,956 Mil.
Total Current Liabilities was $70,948 Mil.
Long-Term Debt was $52,849 Mil.
Net Income was $1,939 Mil.
Non Operating Income was $-3,669 Mil.
Cash Flow from Operations was $29,810 Mil.
Accounts Receivable was $28,393 Mil.
Revenue was $431,344 Mil.
Gross Profit was $74,028 Mil.
Total Current Assets was $99,778 Mil.
Total Assets was $353,116 Mil.
Property, Plant and Equipment(Net PPE) was $192,472 Mil.
Depreciation, Depletion and Amortization(DDA) was $24,499 Mil.
Selling, General & Admin. Expense(SGA) was $13,965 Mil.
Total Current Liabilities was $86,212 Mil.
Long-Term Debt was $38,332 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)
=(45784 / 272156) / (28393 / 431344)
=0.16822705 / 0.06582449
=2.5557

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)
=(74028 / 431344) / (49417 / 272156)
=0.17162172 / 0.18157601
=0.9452

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 - (93358 + 182838) / 340157) / (1 - (99778 + 192472) / 353116)
=0.18803376 / 0.17236829
=1.0909

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
=272156 / 431344
=0.6309

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))
=(24499 / (24499 + 192472)) / (26714 / (26714 + 182838))
=0.11291371 / 0.12748148
=0.8857

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)
=(11956 / 272156) / (13965 / 431344)
=0.04393069 / 0.03237555
=1.3569

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)
=((52849 + 70948) / 340157) / ((38332 + 86212) / 353116)
=0.36394077 / 0.35269996
=1.0319

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
=(1939 - -3669 - 29810) / 340157
=-0.0711

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 -1.79 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 local exchange's currency.

Royal Dutch Shell PLC Annual Data

Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15
DSRI 0.44871.22441.46491.19440.89090.88530.50871.0190.77382.5557
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 -3.05-2.31-1.99-2.83-2.36-2.25-3.11-2.83-3.10-1.79
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