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Rio Tinto PLC (NYSE:RIO)
Beneish M-Score
0.00 (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.

Rio Tinto PLC has a M-score of signals that the company is a manipulator.

During the past 13 years, the highest Beneish M-Score of Rio Tinto PLC was -0.71. The lowest was -3.39. 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 Rio Tinto PLC 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 * +0.528 * +0.404 * +0.892 * +0.115 *
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * +4.679 * -0.327 *
=

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

This Year (Dec15) TTM:Last Year (Dec14) TTM:
Accounts Receivable was $1,365 Mil.
Revenue was $34,829 Mil.
Gross Profit was $6,910 Mil.
Total Current Assets was $15,554 Mil.
Total Assets was $91,564 Mil.
Property, Plant and Equipment(Net PPE) was $61,057 Mil.
Depreciation, Depletion and Amortization(DDA) was $4,645 Mil.
Selling, General & Admin. Expense(SGA) was $0 Mil.
Total Current Liabilities was $10,046 Mil.
Long-Term Debt was $20,857 Mil.
Net Income was $-866 Mil.
Non Operating Income was $-3,643 Mil.
Cash Flow from Operations was $9,383 Mil.
Accounts Receivable was $2,483 Mil.
Revenue was $47,664 Mil.
Gross Profit was $13,007 Mil.
Total Current Assets was $21,125 Mil.
Total Assets was $107,827 Mil.
Property, Plant and Equipment(Net PPE) was $68,693 Mil.
Depreciation, Depletion and Amortization(DDA) was $4,860 Mil.
Selling, General & Admin. Expense(SGA) was $0 Mil.
Total Current Liabilities was $12,220 Mil.
Long-Term Debt was $22,468 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)
=(1365 / 34829) / (2483 / 47664)
=0.03919148 / 0.05209382
=

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)
=(13007 / 47664) / (6910 / 34829)
=0.27288939 / 0.19839789
=

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 - (15554 + 61057) / 91564) / (1 - (21125 + 68693) / 107827)
=0.16330654 / 0.16701754
=

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
=34829 / 47664
=

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))
=(4860 / (4860 + 68693)) / (4645 / (4645 + 61057))
=0.0660748 / 0.070698
=

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)
=(0 / 34829) / (0 / 47664)
=0 / 0
=

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)
=((20857 + 10046) / 91564) / ((22468 + 12220) / 107827)
=0.33750164 / 0.3217005
=

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
=(-866 - -3643 - 9383) / 91564
=-0.0721

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.

Rio Tinto PLC has a M-score of signals that the company is likely to 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.

Rio Tinto PLC Annual Data

Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15
DSRI 0.88741.40980.41931.5505
GMI 0.82620.87961.14293.8106
AQI 0.99452.34490.89261.1431
SGI 1.18031.32211.82710.7708
DEPI 1.13431.29320.62441.1037
SGAI 3.8231.75760.80350
LVGI 0.88892.55061.00430.5635
TATA -0.053-0.0298-0.1295-0.0729
M-score -3.20-2.08-2.86-0.65
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