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Resolute Forest Products Inc (NYSE:RFP)
Beneish M-Score
-3.48 (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 -3.48 suggests that the company is not a manipulator.

RFP' s 10-Year Beneish M-Score Range
Min: -4.41   Max: 0.45
Current: -3.48

-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 -2.66.


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 * 0.8791+0.528 * 0.9941+0.404 * 0.7938+0.892 * 0.9735+0.115 * 0.9188
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0257+4.679 * -0.1478-0.327 * 1.2359
=-3.48

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

This Year (Mar14) TTM:Last Year (Mar13) TTM:
Accounts Receivable was $605 Mil.
Revenue was 1016 + 1150 + 1130 + 1107 = $4,403 Mil.
Gross Profit was 195 + 276 + 273 + 248 = $992 Mil.
Total Current Assets was $1,519 Mil.
Total Assets was $5,257 Mil.
Property, Plant and Equipment(Net PPE) was $2,256 Mil.
Depreciation, Depletion and Amortization(DDA) was $245 Mil.
Selling, General & Admin. Expense(SGA) was $676 Mil.
Total Current Liabilities was $575 Mil.
Long-Term Debt was $597 Mil.
Net Income was -50 + -3 + -588 + -43 = $-684 Mil.
Non Operating Income was -13 + -19 + 5 + -65 = $-92 Mil.
Cash Flow from Operations was -41 + 96 + 62 + 68 = $185 Mil.
Accounts Receivable was $707 Mil.
Revenue was 1074 + 1128 + 1153 + 1168 = $4,523 Mil.
Gross Profit was 218 + 245 + 263 + 287 = $1,013 Mil.
Total Current Assets was $1,632 Mil.
Total Assets was $6,231 Mil.
Property, Plant and Equipment(Net PPE) was $2,386 Mil.
Depreciation, Depletion and Amortization(DDA) was $236 Mil.
Selling, General & Admin. Expense(SGA) was $677 Mil.
Total Current Liabilities was $595 Mil.
Long-Term Debt was $529 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)
=(605 / 4403) / (707 / 4523)
=0.13740631 / 0.15631218
=0.8791

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)
=(276 / 4523) / (195 / 4403)
=0.22396639 / 0.22530093
=0.9941

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 - (1519 + 2256) / 5257) / (1 - (1632 + 2386) / 6231)
=0.28190983 / 0.35515969
=0.7938

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
=4403 / 4523
=0.9735

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 + 2386)) / (245 / (245 + 2256))
=0.09000763 / 0.09796082
=0.9188

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)
=(676 / 4403) / (677 / 4523)
=0.15353168 / 0.14967942
=1.0257

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 + 575) / 5257) / ((529 + 595) / 6231)
=0.22294084 / 0.18038838
=1.2359

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
=(-684 - -92 - 185) / 5257
=-0.1478

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 -3.48 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

Dec11Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14
DSRI 0.87640.87150.76890.89150.98151.04771.05510.98780.91820.8791
GMI 0.87830.93940.98021.04811.08981.08221.11611.04850.98870.9941
AQI 1.11211.12570.9561.02241.11031.09131.14490.88880.79720.7938
SGI 1.00210.95740.94720.92640.94680.97790.97150.98160.99070.9735
DEPI 1.94631.66921.4311.20010.92720.91520.89950.90310.90830.9188
SGAI 0.99371.01081.00980.9930.99331.00621.02331.0341.0461.0257
LVGI 0.75130.70011.04030.97340.95180.9870.91081.06781.22771.2359
TATA -0.0168-0.0167-0.0518-0.0563-0.0463-0.04-0.028-0.1487-0.1456-0.1478
M-score -2.50-2.52-2.98-2.84-2.66-2.57-2.45-3.26-3.43-3.48
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