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Resolute Forest Products Inc (NYSE:RFP)
Beneish M-Score
-2.94 (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 -2.94 suggests that the company is not a manipulator.

RFP' s Beneish M-Score Range Over the Past 10 Years
Min: -4.41   Max: -0.96
Current: -2.94

-4.41
-0.96

During the past 13 years, the highest Beneish M-Score of Resolute Forest Products Inc was -0.96. The lowest was -4.41. And the median was -2.53.


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 * 1.0128+0.528 * 1.0851+0.404 * 1.1628+0.892 * 0.8924+0.115 * 0.971
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0417+4.679 * -0.0938-0.327 * 1.1211
=-2.94

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

This Year (Jun16) TTM:Last Year (Jun15) TTM:
Accounts Receivable was $376 Mil.
Revenue was 891 + 877 + 894 + 905 = $3,567 Mil.
Gross Profit was 223 + 200 + 165 + 218 = $806 Mil.
Total Current Assets was $1,086 Mil.
Total Assets was $4,245 Mil.
Property, Plant and Equipment(Net PPE) was $1,801 Mil.
Depreciation, Depletion and Amortization(DDA) was $226 Mil.
Selling, General & Admin. Expense(SGA) was $608 Mil.
Total Current Liabilities was $474 Mil.
Long-Term Debt was $610 Mil.
Net Income was -42 + -8 + -214 + -6 = $-270 Mil.
Non Operating Income was 0 + 13 + -1 + -1 = $11 Mil.
Cash Flow from Operations was 63 + 6 + 48 + 0 = $117 Mil.
Accounts Receivable was $416 Mil.
Revenue was 926 + 920 + 1055 + 1096 = $3,997 Mil.
Gross Profit was 234 + 202 + 264 + 280 = $980 Mil.
Total Current Assets was $1,455 Mil.
Total Assets was $4,689 Mil.
Property, Plant and Equipment(Net PPE) was $1,944 Mil.
Depreciation, Depletion and Amortization(DDA) was $236 Mil.
Selling, General & Admin. Expense(SGA) was $654 Mil.
Total Current Liabilities was $472 Mil.
Long-Term Debt was $596 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)
=(376 / 3567) / (416 / 3997)
=0.10541071 / 0.10407806
=1.0128

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)
=(980 / 3997) / (806 / 3567)
=0.24518389 / 0.22596019
=1.0851

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 - (1086 + 1801) / 4245) / (1 - (1455 + 1944) / 4689)
=0.31990577 / 0.27511196
=1.1628

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
=3567 / 3997
=0.8924

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))
=(236 / (236 + 1944)) / (226 / (226 + 1801))
=0.10825688 / 0.11149482
=0.971

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)
=(608 / 3567) / (654 / 3997)
=0.17045136 / 0.16362272
=1.0417

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)
=((610 + 474) / 4245) / ((596 + 472) / 4689)
=0.25535925 / 0.22776711
=1.1211

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
=(-270 - 11 - 117) / 4245
=-0.0938

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 -2.94 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

Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15
DSRI 1.17121.54310.61951.2241.21990.68011.04530.93930.87760.9809
GMI 1.1281.38810.71941.02551.08810.87161.09280.99360.95171.064
AQI 0.50251.45180.42291.48341.97341.11211.11030.79721.04661.0325
SGI 1.01321.0981.74690.64481.0871.00210.94680.99070.95450.856
DEPI 0.83231.54050.46331.03680.85061.94630.92720.90830.87990.942
SGAI 1.00681.19760.93320.97550.95080.99370.99331.0461.02631.0762
LVGI 0.9951.1471.37640.30610.87730.75130.95181.22771.04311.0793
TATA -0.0783-0.0235-0.2362-0.1250.1066-0.0164-0.0453-0.1454-0.0773-0.0945
M-score -2.83-1.64-3.82-2.73-1.23-2.68-2.60-3.40-3.03-3.07

Resolute Forest Products Inc Quarterly Data

Mar14Jun14Sep14Dec14Mar15Jun15Sep15Dec15Mar16Jun16
DSRI 0.90630.90430.76480.87760.86350.87640.90980.98091.06511.0128
GMI 0.99410.93610.93680.95170.91480.95110.9811.0641.08581.0851
AQI 0.79380.81160.9581.04660.96120.95160.99631.03251.16761.1628
SGI 0.97350.98320.98060.95450.94530.91110.87430.8560.86540.8924
DEPI 0.91880.91050.89640.87990.90310.93510.96420.9420.95530.971
SGAI 1.02571.01711.02431.02631.05011.06031.05961.07621.06081.0417
LVGI 1.23591.20421.11821.04311.02451.00770.99841.07931.09741.1211
TATA -0.1476-0.1553-0.0534-0.0773-0.095-0.0921-0.0721-0.0945-0.0837-0.0938
M-score -3.46-3.50-3.07-3.03-3.19-3.17-3.04-3.07-2.87-2.94
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