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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 -2.70 suggests that the company is not a manipulator.

RDS.A' s 10-Year Beneish M-Score Range
Min: -3.1   Max: -1.77
Current: -2.82

-3.1
-1.77

During the past 13 years, the highest Beneish M-Score of Royal Dutch Shell PLC was -1.77. The lowest was -3.10. And the median was -2.64.


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 * 1.0715+0.528 * 1.0279+0.404 * 1.0067+0.892 * 0.9769+0.115 * 0.8598
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0232+4.679 * -0.053-0.327 * 1.0454
=-2.70

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

This Year (Jun14) TTM:Last Year (Jun13) TTM:
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.
Net Income was 5307 + 4509 + 1781 + 4677 = $16,274 Mil.
Non Operating Income was -2336 + -351 + -212 + -230 = $-3,129 Mil.
Cash Flow from Operations was 8641 + 13984 + 6028 + 10409 = $39,062 Mil.
Accounts Receivable was $62,312 Mil.
Revenue was 114348 + 115514 + 122611 + 115429 = $467,902 Mil.
Gross Profit was 18447 + 22453 + 21942 + 21672 = $84,514 Mil.
Total Current Assets was $103,876 Mil.
Total Assets was $345,508 Mil.
Property, Plant and Equipment(Net PPE) was $180,863 Mil.
Depreciation, Depletion and Amortization(DDA) was $19,437 Mil.
Selling, General & Admin. Expense(SGA) was $14,622 Mil.
Total Current Liabilities was $91,269 Mil.
Long-Term Debt was $28,017 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)
=(65225 / 457090) / (62312 / 467902)
=0.14269619 / 0.13317319
=1.0715

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)
=(21065 / 467902) / (22139 / 457090)
=0.18062329 / 0.17571594
=1.0279

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 - (112005 + 193069) / 370716) / (1 - (103876 + 180863) / 345508)
=0.17706816 / 0.17588305
=1.0067

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
=457090 / 467902
=0.9769

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))
=(19437 / (19437 + 180863)) / (24561 / (24561 + 193069))
=0.09703944 / 0.11285668
=0.8598

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)
=(14616 / 457090) / (14622 / 467902)
=0.0319762 / 0.03125013
=1.0232

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)
=((38901 + 94904) / 370716) / ((28017 + 91269) / 345508)
=0.36093667 / 0.34524816
=1.0454

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
=(16274 - -3129 - 39062) / 370716
=-0.053

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 -2.70 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 0.96321.53860.54031.24441.19711.19440.89090.88530.66751.0002
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 -2.54-2.30-3.00-2.31-2.25-2.84-2.34-2.32-3.03-2.85

Royal Dutch Shell PLC Quarterly Data

Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14
DSRI 0.8280.84460.88990.66750.88080.91420.89551.26390.99221.0715
GMI 1.07021.11261.06171.0190.99230.9451.01021.04891.06311.0279
AQI 1.03631.011.0090.92890.80710.82720.82350.96441.07841.0067
SGI 1.21841.11671.01560.99420.95950.95740.98430.95410.96350.9769
DEPI 1.25831.15891.0381.02341.00120.84830.83160.77580.70030.8598
SGAI 0.81270.84940.95611.01321.02361.06531.0171.06331.04721.0232
LVGI 0.9180.87770.92040.91840.92850.94720.96580.99971.0251.0454
TATA -0.0189-0.0324-0.0163-0.0524-0.0492-0.0582-0.0683-0.0643-0.0794-0.053
M-score -2.39-2.52-2.57-3.03-2.92-2.98-2.99-2.60-2.88-2.70
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