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Royal Dutch Shell PLC (NYSE:RDS.A)
Beneish M-Score
-2.88 (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 -2.88 suggests that the company is not a manipulator.

RDS.A' s 10-Year Beneish M-Score Range
Min: -3.1   Max: -1.74
Current: -2.88

-3.1
-1.74

During the past 13 years, the highest Beneish M-Score of Royal Dutch Shell PLC was -1.74. The lowest was -3.10. And the median was -2.63.


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 * 0.9922+0.528 * 1.0631+0.404 * 1.0784+0.892 * 0.9635+0.115 * 0.7003
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0472+4.679 * -0.0794-0.327 * 1.025
=-2.88

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

This Year (Mar14) TTM:Last Year (Mar13) TTM:
Accounts Receivable was $63,670 Mil.
Revenue was 112079 + 111479 + 118258 + 114348 = $456,164 Mil.
Gross Profit was 21065 + 18114 + 19000 + 18447 = $76,626 Mil.
Total Current Assets was $104,423 Mil.
Total Assets was $366,593 Mil.
Property, Plant and Equipment(Net PPE) was $194,608 Mil.
Depreciation, Depletion and Amortization(DDA) was $24,708 Mil.
Selling, General & Admin. Expense(SGA) was $14,522 Mil.
Total Current Liabilities was $92,381 Mil.
Long-Term Debt was $41,236 Mil.
Net Income was 4509 + 1781 + 4677 + 1737 = $12,704 Mil.
Non Operating Income was -351 + -212 + -230 + -246 = $-1,039 Mil.
Cash Flow from Operations was 13984 + 6028 + 10409 + 12444 = $42,865 Mil.
Accounts Receivable was $66,598 Mil.
Revenue was 115514 + 122611 + 115429 + 119886 = $473,440 Mil.
Gross Profit was 22453 + 21942 + 21672 + 18479 = $84,546 Mil.
Total Current Assets was $115,743 Mil.
Total Assets was $356,994 Mil.
Property, Plant and Equipment(Net PPE) was $180,244 Mil.
Depreciation, Depletion and Amortization(DDA) was $15,438 Mil.
Selling, General & Admin. Expense(SGA) was $14,393 Mil.
Total Current Liabilities was $99,621 Mil.
Long-Term Debt was $27,329 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)
=(63670 / 456164) / (66598 / 473440)
=0.13957699 / 0.1406683
=0.9922

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)
=(18114 / 473440) / (21065 / 456164)
=0.17857807 / 0.16797906
=1.0631

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 - (104423 + 194608) / 366593) / (1 - (115743 + 180244) / 356994)
=0.18429703 / 0.17089083
=1.0784

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
=456164 / 473440
=0.9635

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))
=(15438 / (15438 + 180244)) / (24708 / (24708 + 194608))
=0.07889331 / 0.11265936
=0.7003

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)
=(14522 / 456164) / (14393 / 473440)
=0.03183504 / 0.0304009
=1.0472

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)
=((41236 + 92381) / 366593) / ((27329 + 99621) / 356994)
=0.36448323 / 0.35560822
=1.025

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
=(12704 - -1039 - 42865) / 366593
=-0.0794

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 -2.88 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

Dec11Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14
DSRI 0.88530.8280.84460.88990.66750.88080.91420.89551.26390.9922
GMI 1.02791.07021.11261.06171.0190.99230.9451.01021.04891.0631
AQI 0.93661.03631.011.0090.92890.80710.82720.82350.96441.0784
SGI 1.28121.21841.11671.01560.99420.95950.95740.98430.95410.9635
DEPI 1.23111.25831.15891.0381.02341.00120.84830.83160.77580.7003
SGAI 0.72180.81270.84940.95611.01321.02361.06531.0171.06331.0472
LVGI 0.9430.9180.87770.92040.91840.92850.94720.96580.99971.025
TATA -0.0154-0.0189-0.0324-0.0163-0.0524-0.0492-0.0582-0.0683-0.0643-0.0794
M-score -2.32-2.39-2.52-2.57-3.03-2.92-2.98-2.99-2.60-2.88
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