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Royal Dutch Shell PLC (NYSE:RDS.A)
Beneish M-Score
-2.98 (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 -3.01 suggests that the company is not a manipulator.

RDS.A' s Beneish M-Score Range Over the Past 10 Years
Min: -3.17   Max: -1.46
Current: -2.98

-3.17
-1.46

During the past 13 years, the highest Beneish M-Score of Royal Dutch Shell PLC was -1.46. The lowest was -3.17. And the median was -2.76.


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 * 1.2192+0.528 * 1.0185+0.404 * 1.0225+0.892 * 0.6824+0.115 * 0.9166
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.251+4.679 * -0.0844-0.327 * 1.0591
=-3.01

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

This Year (Sep15) TTM:Last Year (Sep14) TTM:
Accounts Receivable was $49,130 Mil.
Revenue was 69184 + 73950 + 68846 + 94166 = $306,146 Mil.
Gross Profit was 10153 + 15003 + 14766 + 13061 = $52,983 Mil.
Total Current Assets was $100,252 Mil.
Total Assets was $343,701 Mil.
Property, Plant and Equipment(Net PPE) was $181,681 Mil.
Depreciation, Depletion and Amortization(DDA) was $26,424 Mil.
Selling, General & Admin. Expense(SGA) was $12,292 Mil.
Total Current Liabilities was $76,669 Mil.
Long-Term Debt was $50,438 Mil.
Net Income was -7416 + 3986 + 4430 + 595 = $1,595 Mil.
Non Operating Income was -285 + -412 + -1735 + -974 = $-3,406 Mil.
Cash Flow from Operations was 11231 + 6050 + 7106 + 9608 = $33,995 Mil.
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.



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)
=(49130 / 306146) / (59056 / 448657)
=0.16047899 / 0.13162839
=1.2192

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)
=(15003 / 448657) / (10153 / 306146)
=0.1762616 / 0.17306449
=1.0185

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 - (100252 + 181681) / 343701) / (1 - (105401 + 190842) / 359411)
=0.17971434 / 0.17575422
=1.0225

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
=306146 / 448657
=0.6824

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))
=(25137 / (25137 + 190842)) / (26424 / (26424 + 181681))
=0.11638632 / 0.12697436
=0.9166

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)
=(12292 / 306146) / (14400 / 448657)
=0.04015078 / 0.03209579
=1.251

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)
=((50438 + 76669) / 343701) / ((37065 + 88429) / 359411)
=0.36981853 / 0.34916572
=1.0591

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
=(1595 - -3406 - 33995) / 343701
=-0.0844

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 -3.01 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 0.44871.22441.46491.19440.89090.88530.50871.0190.77382.5557
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 -0.055-0.0456-0.0443-0.024-0.0219-0.0154-0.0395-0.0643-0.0738-0.0711
M-score -3.08-2.33-1.99-2.83-2.36-2.32-3.11-2.83-3.10-1.79

Royal Dutch Shell PLC Quarterly Data

Sep13Dec13Mar14Jun14Sep14Dec14Mar15Jun15Sep15Dec15
DSRI 0.89551.65870.99221.07150.99040.9790.95431.02921.21921.241
GMI 1.02751.04891.06311.02790.98640.98910.96261.00571.01850.9452
AQI 0.82350.96441.07841.00671.01480.98960.96891.00331.02251.0909
SGI 0.98430.95410.96350.97690.95310.93850.85080.75870.68240.6309
DEPI 0.83160.77580.70030.85980.82130.89261.09621.25720.91660.8857
SGAI 1.0171.06331.04721.02321.04111.0141.08661.14941.2511.3569
LVGI 0.96580.99971.0251.04540.98460.97390.92470.96471.05911.0319
TATA -0.0555-0.0643-0.0794-0.053-0.0613-0.0738-0.0523-0.052-0.0844-0.0711
M-score -2.92-2.24-2.88-2.70-2.84-2.92-2.91-2.89-3.01-3.00
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