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Royal Dutch Shell PLC (NYSE:RDS.A)
Beneish M-Score
-2.84 (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 -2.92 suggests that the company is not a manipulator.

RDS.A' s 10-Year Beneish M-Score Range
Min: -3.2   Max: -1.48
Current: -2.84

-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 -2.37.


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 * 0.979+0.528 * 0.9891+0.404 * 0.9896+0.892 * 0.9385+0.115 * 0.8926
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.014+4.679 * -0.0738-0.327 * 0.9739
=-2.92

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

This Year (Dec14) TTM:Last Year (Dec13) TTM:
Accounts Receivable was $58,470 Mil.
Revenue was 94166 + 109825 + 115274 + 112079 = $431,344 Mil.
Gross Profit was 13061 + 17763 + 22139 + 21065 = $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.
Net Income was 595 + 4463 + 5307 + 4509 = $14,874 Mil.
Non Operating Income was -974 + -462 + -2336 + -351 = $-4,123 Mil.
Cash Flow from Operations was 9608 + 12811 + 8641 + 13984 = $45,044 Mil.
Accounts Receivable was $63,638 Mil.
Revenue was 111479 + 118258 + 114348 + 115514 = $459,599 Mil.
Gross Profit was 18114 + 19000 + 18447 + 22453 = $78,014 Mil.
Total Current Assets was $103,343 Mil.
Total Assets was $357,512 Mil.
Property, Plant and Equipment(Net PPE) was $191,897 Mil.
Depreciation, Depletion and Amortization(DDA) was $21,509 Mil.
Selling, General & Admin. Expense(SGA) was $14,675 Mil.
Total Current Liabilities was $93,258 Mil.
Long-Term Debt was $36,218 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)
=(58470 / 431344) / (63638 / 459599)
=0.13555306 / 0.13846418
=0.979

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)
=(17763 / 459599) / (13061 / 431344)
=0.16974362 / 0.17162172
=0.9891

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 - (99778 + 192472) / 353116) / (1 - (103343 + 191897) / 357512)
=0.17236829 / 0.17418157
=0.9896

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
=431344 / 459599
=0.9385

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))
=(21509 / (21509 + 191897)) / (24499 / (24499 + 192472))
=0.10078911 / 0.11291371
=0.8926

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)
=(13965 / 431344) / (14675 / 459599)
=0.03237555 / 0.03193001
=1.014

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)
=((38332 + 86212) / 353116) / ((36218 + 93258) / 357512)
=0.35269996 / 0.36215847
=0.9739

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
=(14874 - -4123 - 45044) / 353116
=-0.0738

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 -2.92 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

Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14
DSRI 1.53860.44871.22441.46491.19440.89090.88530.50871.0191.5936
GMI 0.91781.0071.05490.91170.91521.06741.02681.02081.04810.9891
AQI 0.77611.16141.08210.97671.15180.94621.02410.95690.85630.9896
SGI 1.15151.03951.11581.32370.60541.32621.28120.99420.95410.9385
DEPI 1.05911.08390.96641.05761.09771.00471.23111.02340.77580.8926
SGAI 0.96450.95330.89650.76841.70290.67170.72061.02551.05231.014
LVGI 1.24030.87171.0781.06640.9371.05680.92170.91341.02830.9739
TATA -0.0543-0.055-0.0456-0.0443-0.024-0.0095-0.0008-0.0537-0.0643-0.0738
M-score -2.30-3.08-2.33-2.00-2.84-2.28-2.21-3.17-2.88-2.35

Royal Dutch Shell PLC Quarterly Data

Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14Dec14
DSRI 0.88990.50870.88080.91420.89551.65870.99221.07150.99040.979
GMI 1.06111.02080.99390.94631.01111.04811.06241.02740.98610.9891
AQI 1.0090.95690.80710.82720.82350.85631.07841.00671.01480.9896
SGI 1.01560.99420.95950.95740.98430.95410.96350.97690.95310.9385
DEPI 1.0381.02341.00120.84830.83160.77580.70030.85980.82130.8926
SGAI 0.96051.02551.03181.06971.01661.05231.03841.01671.03671.014
LVGI 0.92040.91340.92850.94720.96581.02831.0251.04540.98460.9739
TATA -0.0604-0.0537-0.0411-0.0416-0.0427-0.0643-0.0794-0.053-0.0613-0.0738
M-score -2.78-3.17-2.88-2.90-2.87-2.29-2.88-2.70-2.84-2.92
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