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Resolute Forest Products Inc (NYSE:RFP)
Beneish M-Score
-3.04 (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 -3.04 suggests that the company is not a manipulator.

RFP' s Beneish M-Score Range Over the Past 10 Years
Min: -4.41   Max: 0.45
Current: -3.04

-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 -2.68.


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 * 0.9098+0.528 * 0.981+0.404 * 0.9963+0.892 * 0.8743+0.115 * 0.9642
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0596+4.679 * -0.0721-0.327 * 0.9984
=-3.04

* 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 $420 Mil.
Revenue was 905 + 926 + 920 + 1055 = $3,806 Mil.
Gross Profit was 218 + 234 + 202 + 264 = $918 Mil.
Total Current Assets was $1,368 Mil.
Total Assets was $4,548 Mil.
Property, Plant and Equipment(Net PPE) was $1,932 Mil.
Depreciation, Depletion and Amortization(DDA) was $235 Mil.
Selling, General & Admin. Expense(SGA) was $630 Mil.
Total Current Liabilities was $468 Mil.
Long-Term Debt was $596 Mil.
Net Income was -6 + -4 + -33 + -109 = $-152 Mil.
Non Operating Income was -1 + 1 + 5 + -25 = $-20 Mil.
Cash Flow from Operations was 0 + 61 + 29 + 106 = $196 Mil.
Accounts Receivable was $528 Mil.
Revenue was 1096 + 1091 + 1016 + 1150 = $4,353 Mil.
Gross Profit was 280 + 279 + 195 + 276 = $1,030 Mil.
Total Current Assets was $1,551 Mil.
Total Assets was $5,036 Mil.
Property, Plant and Equipment(Net PPE) was $2,098 Mil.
Depreciation, Depletion and Amortization(DDA) was $245 Mil.
Selling, General & Admin. Expense(SGA) was $680 Mil.
Total Current Liabilities was $583 Mil.
Long-Term Debt was $597 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)
=(420 / 3806) / (528 / 4353)
=0.11035208 / 0.12129566
=0.9098

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)
=(234 / 4353) / (218 / 3806)
=0.23661842 / 0.24119811
=0.981

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 - (1368 + 1932) / 4548) / (1 - (1551 + 2098) / 5036)
=0.27440633 / 0.275417
=0.9963

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
=3806 / 4353
=0.8743

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))
=(245 / (245 + 2098)) / (235 / (235 + 1932))
=0.10456679 / 0.10844485
=0.9642

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)
=(630 / 3806) / (680 / 4353)
=0.16552811 / 0.15621411
=1.0596

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)
=((596 + 468) / 4548) / ((597 + 583) / 5036)
=0.23394899 / 0.23431295
=0.9984

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
=(-152 - -20 - 196) / 4548
=-0.0721

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 -3.04 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

Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14
DSRI 1.49941.17121.54310.61951.2241.21990.68011.04530.93930.8776
GMI 1.06091.1281.38810.71941.02551.08810.87831.08450.99360.9517
AQI 0.92760.50251.45180.42291.48341.97341.11211.11030.79721.0001
SGI 0.78891.01321.0981.74690.64481.0871.00210.94680.99070.9545
DEPI 1.90950.83231.54050.46331.03680.85061.94630.92720.90830.8799
SGAI 0.99561.00681.19760.93320.97550.95080.99370.99331.0461.0263
LVGI 1.00640.9951.1471.37640.30610.87730.75130.95181.22771.0482
TATA -0.0523-0.1382-0.0349-0.2362-0.21480.3723-0.0168-0.0453-0.1454-0.0772
M-score -2.35-3.11-1.69-3.82-3.150.01-2.68-2.60-3.40-3.05

Resolute Forest Products Inc Quarterly Data

Jun13Sep13Dec13Mar14Jun14Sep14Dec14Mar15Jun15Sep15
DSRI 1.05461.18930.93930.90630.90430.76480.87760.86350.87640.9098
GMI 1.11611.04850.98870.99410.93610.93680.95170.91480.95110.981
AQI 1.14490.88880.79720.79380.81160.9581.00010.96120.95160.9963
SGI 0.97150.98160.99070.97350.98320.98060.95450.94530.91110.8743
DEPI 0.89950.90310.90830.91880.91050.89640.87990.90310.93510.9642
SGAI 1.02331.0341.0461.02571.01711.02431.02631.05011.06031.0596
LVGI 0.91081.06781.22771.23591.20421.11821.04821.02451.00770.9984
TATA -0.028-0.1487-0.1454-0.1476-0.1553-0.0534-0.0772-0.095-0.0921-0.0721
M-score -2.45-3.08-3.41-3.46-3.50-3.07-3.05-3.19-3.17-3.04
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