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Resolute Forest Products Inc (NYSE:RFP)
Beneish M-Score
-3.05 (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 -3.05 suggests that the company is not a manipulator.

RFP' s 10-Year Beneish M-Score Range
Min: -4   Max: -0.12
Current: -3.05

-4
-0.12

During the past 13 years, the highest Beneish M-Score of Resolute Forest Products Inc was -0.12. The lowest was -4.00. And the median was -2.74.


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 * 0.8776+0.528 * 0.9517+0.404 * 1.0001+0.892 * 0.9545+0.115 * 0.8799
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0263+4.679 * -0.0772-0.327 * 1.0482
=-3.05

* 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 $449 Mil.
Revenue was 1055 + 1096 + 1091 + 1016 = $4,258 Mil.
Gross Profit was 264 + 280 + 279 + 195 = $1,018 Mil.
Total Current Assets was $1,534 Mil.
Total Assets was $4,921 Mil.
Property, Plant and Equipment(Net PPE) was $1,985 Mil.
Depreciation, Depletion and Amortization(DDA) was $243 Mil.
Selling, General & Admin. Expense(SGA) was $673 Mil.
Total Current Liabilities was $519 Mil.
Long-Term Debt was $596 Mil.
Net Income was -109 + -116 + -2 + -50 = $-277 Mil.
Non Operating Income was -25 + -65 + 20 + -13 = $-83 Mil.
Cash Flow from Operations was 106 + 58 + 63 + -41 = $186 Mil.
Accounts Receivable was $536 Mil.
Revenue was 1150 + 1130 + 1107 + 1074 = $4,461 Mil.
Gross Profit was 276 + 273 + 248 + 218 = $1,015 Mil.
Total Current Assets was $1,562 Mil.
Total Assets was $5,385 Mil.
Property, Plant and Equipment(Net PPE) was $2,289 Mil.
Depreciation, Depletion and Amortization(DDA) was $243 Mil.
Selling, General & Admin. Expense(SGA) was $687 Mil.
Total Current Liabilities was $567 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)
=(449 / 4258) / (536 / 4461)
=0.10544857 / 0.12015243
=0.8776

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)
=(280 / 4461) / (264 / 4258)
=0.22752746 / 0.23907938
=0.9517

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 - (1534 + 1985) / 4921) / (1 - (1562 + 2289) / 5385)
=0.28490144 / 0.28486537
=1.0001

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
=4258 / 4461
=0.9545

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))
=(243 / (243 + 2289)) / (243 / (243 + 1985))
=0.09597156 / 0.10906643
=0.8799

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)
=(673 / 4258) / (687 / 4461)
=0.15805543 / 0.15400134
=1.0263

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 + 519) / 4921) / ((597 + 567) / 5385)
=0.22657996 / 0.21615599
=1.0482

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
=(-277 - -83 - 186) / 4921
=-0.0772

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 -3.05 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

Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14Dec14
DSRI 0.74051.04531.08161.05461.18930.93930.90630.90430.76480.8776
GMI 1.04811.08981.08221.11611.04850.98870.99410.93610.93680.9517
AQI 1.02241.11031.09131.14490.88880.79720.79380.81160.9581.0001
SGI 0.92640.94680.97790.97150.98160.99070.97350.98320.98060.9545
DEPI 1.20010.92720.91520.89950.90310.90830.91880.91050.89640.8799
SGAI 0.9930.99331.00621.02331.0341.0461.02571.01711.02431.0263
LVGI 0.97340.95180.9870.91081.06781.22771.23591.20421.11821.0482
TATA -0.0563-0.0463-0.04-0.028-0.1487-0.1454-0.1476-0.1553-0.0534-0.0772
M-score -2.98-2.60-2.54-2.45-3.08-3.41-3.46-3.50-3.07-3.05
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