Switch to:
Resolute Forest Products Inc (NYSE:RFP)
Beneish M-Score
-3.43 (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 -3.43 suggests that the company is not a manipulator.

RFP' s 10-Year Beneish M-Score Range
Min: -4   Max: -0.12
Current: -3.43

-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 -2.66.


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 * 0.9182+0.528 * 0.9897+0.404 * 0.7972+0.892 * 0.9907+0.115 * 0.9083
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.046+4.679 * -0.1456-0.327 * 1.2277
=-3.43

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

This Year (Dec13) TTM:Last Year (Dec12) TTM:
Accounts Receivable was $634 Mil.
Revenue was 1150 + 1130 + 1107 + 1074 = $4,461 Mil.
Gross Profit was 276 + 273 + 248 + 217 = $1,014 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.
Net Income was -3 + -588 + -43 + -5 = $-639 Mil.
Non Operating Income was -19 + 5 + -65 + 18 = $-61 Mil.
Cash Flow from Operations was 96 + 62 + 68 + -20 = $206 Mil.
Accounts Receivable was $697 Mil.
Revenue was 1128 + 1153 + 1168 + 1054 = $4,503 Mil.
Gross Profit was 245 + 263 + 287 + 218 = $1,013 Mil.
Total Current Assets was $1,630 Mil.
Total Assets was $6,333 Mil.
Property, Plant and Equipment(Net PPE) was $2,440 Mil.
Depreciation, Depletion and Amortization(DDA) was $233 Mil.
Selling, General & Admin. Expense(SGA) was $663 Mil.
Total Current Liabilities was $583 Mil.
Long-Term Debt was $532 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)
=(634 / 4461) / (697 / 4503)
=0.1421206 / 0.1547857
=0.9182

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)
=(273 / 4503) / (276 / 4461)
=0.22496114 / 0.2273033
=0.9897

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 - (1562 + 2289) / 5385) / (1 - (1630 + 2440) / 6333)
=0.28486537 / 0.3573346
=0.7972

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
=4461 / 4503
=0.9907

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))
=(233 / (233 + 2440)) / (243 / (243 + 2289))
=0.08716798 / 0.09597156
=0.9083

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)
=(687 / 4461) / (663 / 4503)
=0.15400134 / 0.14723518
=1.046

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 + 567) / 5385) / ((532 + 583) / 6333)
=0.21615599 / 0.1760619
=1.2277

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
=(-639 - -61 - 206) / 5385
=-0.1456

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 -3.43 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

Sep11Dec11Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13
DSRI 0.970.87640.87150.76890.89150.98151.04771.05510.98780.9182
GMI 0.85320.87830.93940.98021.04811.08981.08331.11731.04960.9897
AQI 1.86441.11211.12570.9561.02241.11031.09131.14490.88880.7972
SGI 1.06111.00210.95740.94720.92640.94680.97790.97150.98160.9907
DEPI 1.34061.94631.66921.4311.20010.92720.91520.89950.90310.9083
SGAI 0.9960.99371.01081.00980.9930.99331.00621.02331.0341.046
LVGI 0.64540.75130.70011.04030.97340.95180.9870.91081.06781.2277
TATA 0.5288-0.0168-0.0167-0.0518-0.0563-0.0463-0.04-0.028-0.1487-0.1456
M-score 0.45-2.50-2.52-2.98-2.84-2.66-2.57-2.45-3.26-3.43
Get WordPress Plugins for easy affiliate links on Stock Tickers and Guru Names | Earn affiliate commissions by embedding GuruFocus Charts
GuruFocus Affiliate Program: Earn up to $400 per referral. ( Learn More)
Free 7-day Trial
FEEDBACK
Hide