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Resolute Forest Products Inc (NYSE:RFP)
Beneish M-Score
-3.07 (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 -3.07 suggests that the company is not a manipulator.

RFP' s 10-Year Beneish M-Score Range
Min: -4.38   Max: 0.47
Current: -3.07

-4.38
0.47

During the past 13 years, the highest Beneish M-Score of Resolute Forest Products Inc was 0.47. The lowest was -4.38. And the median was -2.65.


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 * 0.7648+0.528 * 0.9435+0.404 * 0.958+0.892 * 0.9806+0.115 * 0.8964
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0243+4.679 * -0.0534-0.327 * 1.1182
=-3.07

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

This Year (Sep14) TTM:Last Year (Sep13) TTM:
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.
Net Income was -116 + -2 + -50 + -3 = $-171 Mil.
Non Operating Income was -65 + 20 + -13 + -20 = $-78 Mil.
Cash Flow from Operations was 58 + 63 + -41 + 96 = $176 Mil.
Accounts Receivable was $704 Mil.
Revenue was 1130 + 1107 + 1074 + 1128 = $4,439 Mil.
Gross Profit was 273 + 248 + 218 + 252 = $991 Mil.
Total Current Assets was $1,628 Mil.
Total Assets was $5,555 Mil.
Property, Plant and Equipment(Net PPE) was $2,330 Mil.
Depreciation, Depletion and Amortization(DDA) was $241 Mil.
Selling, General & Admin. Expense(SGA) was $677 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)
=(528 / 4353) / (704 / 4439)
=0.12129566 / 0.15859428
=0.7648

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)
=(279 / 4439) / (280 / 4353)
=0.22324848 / 0.23661842
=0.9435

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 - (1551 + 2098) / 5036) / (1 - (1628 + 2330) / 5555)
=0.275417 / 0.28748875
=0.958

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
=4353 / 4439
=0.9806

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))
=(241 / (241 + 2330)) / (245 / (245 + 2098))
=0.09373785 / 0.10456679
=0.8964

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)
=(680 / 4353) / (677 / 4439)
=0.15621411 / 0.15251183
=1.0243

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 + 583) / 5036) / ((597 + 567) / 5555)
=0.23431295 / 0.20954095
=1.1182

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
=(-171 - -78 - 176) / 5036
=-0.0534

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 -3.07 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 1.0590.99160.9152.60460.61951.2241.21990.87640.81110.9393
GMI 0.76580.64821.8450.86140.71941.02551.08810.87831.0920.9868
AQI 1.0561.22331.0220.71390.44791.40091.97341.11211.11280.7954
SGI 1.30040.95020.90640.93081.74690.64481.0871.00210.94680.9907
DEPI 0.70230.84331.71891.54840.45911.04620.85061.94630.92720.9083
SGAI 1.07983.47630.19236.2950.93320.97550.95080.99370.99331.046
LVGI 1.02120.96911.00051.14071.37640.30090.89250.75130.95311.226
TATA -0.0418-0.0759-0.0206-0.0349-0.2362-0.21480.3723-0.0168-0.0451-0.1454
M-score -2.51-3.42-2.06-2.31-3.81-3.180.01-2.50-2.81-3.41

Resolute Forest Products Inc Quarterly Data

Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14
DSRI 0.64590.74050.81111.08161.05461.18930.93930.90630.90430.7648
GMI 0.9371.00821.04051.03111.10981.03220.98680.99210.9380.9435
AQI 0.9561.02241.11281.09131.14490.88880.79540.79380.81160.958
SGI 0.94720.92640.94680.97790.97150.98160.99070.97350.98320.9806
DEPI 1.4311.20010.92720.91520.89950.90310.90830.91880.91050.8964
SGAI 1.00980.9930.99331.00621.02331.0341.0461.02571.01711.0243
LVGI 1.04030.97340.95310.9870.91081.06781.2261.23591.20421.1182
TATA -0.0521-0.0576-0.0449-0.0387-0.0262-0.1456-0.1454-0.1476-0.1553-0.0534
M-score -3.11-3.01-2.84-2.56-2.45-3.07-3.41-3.46-3.50-3.07
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