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Royal Dutch Shell PLC (NYSE:RDS.A)
Beneish M-Score
-2.50 (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 -2.54 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: -2.5

-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 -2.73.


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 * 1.5676+0.528 * 0.9961+0.404 * 1.2097+0.892 * 0.652+0.115 * 0.9943
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.3902+4.679 * -0.0554-0.327 * 1.0796
=-2.54

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

This Year (Mar16) TTM:Last Year (Mar15) TTM:
Accounts Receivable was $52,835 Mil.
Revenue was 49732 + 60176 + 69184 + 73950 = $253,042 Mil.
Gross Profit was 9681 + 9495 + 10153 + 15003 = $44,332 Mil.
Total Current Assets was $81,250 Mil.
Total Assets was $416,304 Mil.
Property, Plant and Equipment(Net PPE) was $245,133 Mil.
Depreciation, Depletion and Amortization(DDA) was $28,257 Mil.
Selling, General & Admin. Expense(SGA) was $12,168 Mil.
Total Current Liabilities was $78,465 Mil.
Long-Term Debt was $73,005 Mil.
Net Income was 484 + 939 + -7416 + 3986 = $-2,007 Mil.
Non Operating Income was -389 + -1237 + -285 + -412 = $-2,323 Mil.
Cash Flow from Operations was 661 + 5423 + 11231 + 6050 = $23,365 Mil.
Accounts Receivable was $51,696 Mil.
Revenue was 68846 + 94166 + 109825 + 115274 = $388,111 Mil.
Gross Profit was 14766 + 13061 + 17763 + 22139 = $67,729 Mil.
Total Current Assets was $91,531 Mil.
Total Assets was $341,832 Mil.
Property, Plant and Equipment(Net PPE) was $189,263 Mil.
Depreciation, Depletion and Amortization(DDA) was $21,679 Mil.
Selling, General & Admin. Expense(SGA) was $13,425 Mil.
Total Current Liabilities was $79,502 Mil.
Long-Term Debt was $35,703 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)
=(52835 / 253042) / (51696 / 388111)
=0.20879933 / 0.13319901
=1.5676

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)
=(67729 / 388111) / (44332 / 253042)
=0.17450935 / 0.17519621
=0.9961

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 - (81250 + 245133) / 416304) / (1 - (91531 + 189263) / 341832)
=0.21599841 / 0.1785614
=1.2097

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
=253042 / 388111
=0.652

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))
=(21679 / (21679 + 189263)) / (28257 / (28257 + 245133))
=0.10277233 / 0.10335784
=0.9943

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)
=(12168 / 253042) / (13425 / 388111)
=0.04808688 / 0.03459062
=1.3902

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)
=((73005 + 78465) / 416304) / ((35703 + 79502) / 341832)
=0.36384469 / 0.33702228
=1.0796

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
=(-2007 - -2323 - 23365) / 416304
=-0.0554

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 -2.54 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 0.44871.22441.50511.16250.89090.88530.50871.0190.77381.1503
GMI 1.0071.05491.21360.71491.05691.02350.99451.04810.98910.9452
AQI 1.16141.08210.97671.15180.94620.93660.92890.96440.98961.0909
SGI 1.03951.11581.28830.62211.32621.28120.99420.95410.93850.6309
DEPI 1.08390.96641.05761.09771.00471.23111.02340.77580.89260.8857
SGAI 0.95330.89650.79521.64550.67170.72061.02551.05231.0141.3569
LVGI 0.87171.0781.06640.9371.05680.9430.91840.99970.97391.0319
TATA -0.0484-0.0413-0.0812-0.024-0.0095-0.0008-0.0552-0.0613-0.0738-0.0711
M-score -3.05-2.31-2.01-2.95-2.29-2.26-3.20-2.81-3.10-3.08

Royal Dutch Shell PLC Quarterly Data

Dec13Mar14Jun14Sep14Dec14Mar15Jun15Sep15Dec15Mar16
DSRI 1.65870.99221.07150.99040.9790.95431.02921.21921.2411.5676
GMI 1.04891.06311.02790.98640.98910.96261.00571.01850.94520.9961
AQI 0.96441.07841.00671.01480.98960.96891.00331.02251.09091.2097
SGI 0.95410.96350.97690.95310.93850.85080.75870.68240.63090.652
DEPI 0.77580.70030.85980.82130.89261.09621.25720.91660.88570.9943
SGAI 1.06331.04721.02321.04111.0141.08661.14941.2511.35691.3902
LVGI 0.99971.0251.04540.98460.97390.92470.96471.05911.03191.0796
TATA -0.0643-0.0794-0.053-0.0613-0.0738-0.0523-0.052-0.0844-0.0711-0.0554
M-score -2.24-2.88-2.70-2.84-2.92-2.91-2.89-3.01-3.00-2.54
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