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Resolute Forest Products Inc (NYSE:RFP)
Beneish M-Score
-3.51 (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.

Resolute Forest Products Inc has a M-score of -3.51 suggests that the company is not a manipulator.

RFP' s 10-Year Beneish M-Score Range
Min: -4.41   Max: 0.45
Current: -3.51

-4.41
0.45

During the past 13 years, the highest Beneish M-Score of Resolute Forest Products Inc was 0.45. The lowest was -4.41. And the median was -2.67.


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 Resolute Forest Products Inc 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 * 0.8889+0.528 * 0.9361+0.404 * 0.8116+0.892 * 0.9832+0.115 * 0.9105
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0171+4.679 * -0.1555-0.327 * 1.2042
=-3.51

* 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 $610 Mil.
Revenue was 1091 + 1016 + 1150 + 1130 = $4,387 Mil.
Gross Profit was 279 + 195 + 276 + 273 = $1,023 Mil.
Total Current Assets was $1,546 Mil.
Total Assets was $5,247 Mil.
Property, Plant and Equipment(Net PPE) was $2,184 Mil.
Depreciation, Depletion and Amortization(DDA) was $246 Mil.
Selling, General & Admin. Expense(SGA) was $677 Mil.
Total Current Liabilities was $589 Mil.
Long-Term Debt was $597 Mil.
Net Income was -2 + -50 + -3 + -588 = $-643 Mil.
Non Operating Income was 20 + -13 + -19 + 5 = $-7 Mil.
Cash Flow from Operations was 63 + -41 + 96 + 62 = $180 Mil.
Accounts Receivable was $698 Mil.
Revenue was 1107 + 1074 + 1128 + 1153 = $4,462 Mil.
Gross Profit was 248 + 218 + 245 + 263 = $974 Mil.
Total Current Assets was $1,604 Mil.
Total Assets was $6,148 Mil.
Property, Plant and Equipment(Net PPE) was $2,354 Mil.
Depreciation, Depletion and Amortization(DDA) was $239 Mil.
Selling, General & Admin. Expense(SGA) was $677 Mil.
Total Current Liabilities was $552 Mil.
Long-Term Debt was $602 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)
=(610 / 4387) / (698 / 4462)
=0.13904718 / 0.15643209
=0.8889

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)
=(195 / 4462) / (279 / 4387)
=0.21828776 / 0.23318897
=0.9361

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 - (1546 + 2184) / 5247) / (1 - (1604 + 2354) / 6148)
=0.28911759 / 0.3562134
=0.8116

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
=4387 / 4462
=0.9832

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))
=(239 / (239 + 2354)) / (246 / (246 + 2184))
=0.09217123 / 0.10123457
=0.9105

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)
=(677 / 4387) / (677 / 4462)
=0.15431958 / 0.15172568
=1.0171

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)
=((597 + 589) / 5247) / ((602 + 552) / 6148)
=0.22603392 / 0.18770332
=1.2042

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
=(-643 - -7 - 180) / 5247
=-0.1555

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.

Resolute Forest Products Inc has a M-score of -3.51 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.

Resolute Forest Products Inc Annual Data

Dec04Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13
DSRI 0.96031.49941.17121.54310.61951.2241.21990.87640.98150.9182
GMI 0.81891.06091.1281.38810.71941.02551.08810.87831.08450.9936
AQI 1.37020.92760.50251.45180.42291.48341.97341.11211.11030.7972
SGI 1.14230.78891.01321.0981.74690.64481.0871.00210.94680.9907
DEPI 0.58981.90950.83231.54050.46331.03680.85061.94630.92720.9083
SGAI 0.98760.99561.00681.19760.93320.97550.95080.99370.99331.046
LVGI 0.98871.00640.9951.1471.37640.30610.87730.75130.95181.2277
TATA -0.0396-0.0523-0.1382-0.0349-0.2362-0.21480.3723-0.0168-0.0453-0.1454
M-score -2.56-2.35-3.11-1.69-3.82-3.150.01-2.50-2.66-3.42

Resolute Forest Products Inc Quarterly Data

Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14
DSRI 0.87150.76890.89150.98151.04771.05510.98780.91820.87910.8889
GMI 0.93940.98021.04811.08981.08221.11611.04850.98870.99410.9361
AQI 1.12570.9561.02241.11031.09131.14490.88880.79720.79380.8116
SGI 0.95740.94720.92640.94680.97790.97150.98160.99070.97350.9832
DEPI 1.66921.4311.20010.92720.91520.89950.90310.90830.91880.9105
SGAI 1.01081.00980.9930.99331.00621.02331.0341.0461.02571.0171
LVGI 0.70011.04030.97340.95180.9870.91081.06781.22771.23591.2042
TATA -0.0167-0.0518-0.0563-0.0463-0.04-0.028-0.1487-0.1456-0.1478-0.1555
M-score -2.52-2.98-2.84-2.66-2.57-2.45-3.26-3.43-3.48-3.51
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