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Royal Dutch Shell PLC (NYSE:RDS.A)
Beneish M-Score
-2.85 (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 -2.84 suggests that the company is not a manipulator.

RDS.A' s 10-Year Beneish M-Score Range
Min: -3.2   Max: -1.48
Current: -2.85

-3.2
-1.48

During the past 13 years, the highest Beneish M-Score of Royal Dutch Shell PLC was -1.48. The lowest was -3.20. 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 * 0.9904+0.528 * 0.9864+0.404 * 1.0148+0.892 * 0.9531+0.115 * 0.8213
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0411+4.679 * -0.0613-0.327 * 0.9846
=-2.84

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

This Year (Sep14) TTM:Last Year (Sep13) TTM:
Accounts Receivable was $59,056 Mil.
Revenue was 109825 + 115274 + 112079 + 111479 = $448,657 Mil.
Gross Profit was 17763 + 22139 + 21065 + 18114 = $79,081 Mil.
Total Current Assets was $105,401 Mil.
Total Assets was $359,411 Mil.
Property, Plant and Equipment(Net PPE) was $190,842 Mil.
Depreciation, Depletion and Amortization(DDA) was $25,137 Mil.
Selling, General & Admin. Expense(SGA) was $14,400 Mil.
Total Current Liabilities was $88,429 Mil.
Long-Term Debt was $37,065 Mil.
Net Income was 4463 + 5307 + 4509 + 1781 = $16,060 Mil.
Non Operating Income was -462 + -2336 + -351 + -212 = $-3,361 Mil.
Cash Flow from Operations was 12811 + 8641 + 13984 + 6028 = $41,464 Mil.
Accounts Receivable was $62,561 Mil.
Revenue was 118258 + 114348 + 115514 + 122611 = $470,731 Mil.
Gross Profit was 19000 + 18447 + 22453 + 21942 = $81,842 Mil.
Total Current Assets was $106,659 Mil.
Total Assets was $354,613 Mil.
Property, Plant and Equipment(Net PPE) was $186,541 Mil.
Depreciation, Depletion and Amortization(DDA) was $19,715 Mil.
Selling, General & Admin. Expense(SGA) was $14,512 Mil.
Total Current Liabilities was $93,782 Mil.
Long-Term Debt was $31,972 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)
=(59056 / 448657) / (62561 / 470731)
=0.13162839 / 0.13290181
=0.9904

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)
=(22139 / 470731) / (17763 / 448657)
=0.1738615 / 0.1762616
=0.9864

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 - (105401 + 190842) / 359411) / (1 - (106659 + 186541) / 354613)
=0.17575422 / 0.17318316
=1.0148

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
=448657 / 470731
=0.9531

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))
=(19715 / (19715 + 186541)) / (25137 / (25137 + 190842))
=0.0955851 / 0.11638632
=0.8213

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)
=(14400 / 448657) / (14512 / 470731)
=0.03209579 / 0.03082865
=1.0411

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)
=((37065 + 88429) / 359411) / ((31972 + 93782) / 354613)
=0.34916572 / 0.35462321
=0.9846

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
=(16060 - -3361 - 41464) / 359411
=-0.0613

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 -2.84 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

Dec04Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13
DSRI 0.96321.53860.44871.22441.46491.19440.89090.88530.50871.019
GMI 1.03430.91781.0071.05490.91170.91521.06741.02791.0191.0489
AQI 0.87250.77611.16141.08210.97671.15180.94620.93660.92890.9644
SGI 1.34291.15151.03951.11581.32370.60541.32621.28120.99420.9541
DEPI 0.92981.05911.08390.96641.05761.09771.00471.23111.02340.7758
SGAI 0.84660.96450.95330.89650.76841.70290.67170.72181.01321.0633
LVGI 0.90721.24030.87171.0781.06640.9371.05680.9430.91840.9997
TATA -0.0732-0.0543-0.055-0.0456-0.0443-0.024-0.0219-0.0154-0.0524-0.0643
M-score -2.54-2.30-3.08-2.33-2.00-2.84-2.34-2.32-3.17-2.83

Royal Dutch Shell PLC Quarterly Data

Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14
DSRI 0.84460.88990.50870.88080.91420.89551.65870.99221.07150.9904
GMI 1.11261.06171.0190.99230.9451.01021.04891.06311.02790.9864
AQI 1.011.0090.92890.80710.82720.82350.96441.07841.00671.0148
SGI 1.11671.01560.99420.95950.95740.98430.95410.96350.97690.9531
DEPI 1.15891.0381.02341.00120.84830.83160.77580.70030.85980.8213
SGAI 0.84940.95611.01321.02361.06531.0171.06331.04721.02321.0411
LVGI 0.87770.92040.91840.92850.94720.96580.99971.0251.04540.9846
TATA -0.0324-0.0163-0.0524-0.0492-0.0582-0.0683-0.0643-0.0794-0.053-0.0613
M-score -2.52-2.57-3.17-2.92-2.98-2.99-2.24-2.88-2.70-2.84
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