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RR Donnelley & Sons Co (NAS:RRD)
Beneish M-Score
-2.61 (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.

RR Donnelley & Sons Co has a M-score of -2.61 suggests that the company is not a manipulator.

RRD' s 10-Year Beneish M-Score Range
Min: -3.78   Max: -1.18
Current: -2.61

-3.78
-1.18

During the past 13 years, the highest Beneish M-Score of RR Donnelley & Sons Co was -1.18. The lowest was -3.78. And the median was -2.92.


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 RR Donnelley & Sons Co 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 * 1.0839+0.528 * 1.0232+0.404 * 0.9452+0.892 * 1.065+0.115 * 1.1055
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0575+4.679 * -0.0535-0.327 * 1.0216
=-2.61

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

This Year (Jun14) TTM:Last Year (Jun13) TTM:
Accounts Receivable was $2,083 Mil.
Revenue was 2902.5 + 2673.8 + 2755.3 + 2614.9 = $10,947 Mil.
Gross Profit was 662.2 + 573.2 + 603.6 + 570.4 = $2,409 Mil.
Total Current Assets was $3,203 Mil.
Total Assets was $7,547 Mil.
Property, Plant and Equipment(Net PPE) was $1,650 Mil.
Depreciation, Depletion and Amortization(DDA) was $449 Mil.
Selling, General & Admin. Expense(SGA) was $1,261 Mil.
Total Current Liabilities was $2,348 Mil.
Long-Term Debt was $3,429 Mil.
Net Income was 64.7 + -29 + 104 + 14.7 = $154 Mil.
Non Operating Income was -2.3 + -81.7 + -18.2 + -46 = $-148 Mil.
Cash Flow from Operations was 150.1 + -80.4 + 387.7 + 249.2 = $707 Mil.
Accounts Receivable was $1,805 Mil.
Revenue was 2571.6 + 2538.5 + 2659.6 + 2508.8 = $10,279 Mil.
Gross Profit was 598.2 + 558.3 + 585.3 + 573 = $2,315 Mil.
Total Current Assets was $2,807 Mil.
Total Assets was $6,902 Mil.
Property, Plant and Equipment(Net PPE) was $1,488 Mil.
Depreciation, Depletion and Amortization(DDA) was $460 Mil.
Selling, General & Admin. Expense(SGA) was $1,120 Mil.
Total Current Liabilities was $1,934 Mil.
Long-Term Debt was $3,238 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)
=(2083.3 / 10946.5) / (1804.7 / 10278.5)
=0.19031654 / 0.17558009
=1.0839

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)
=(573.2 / 10278.5) / (662.2 / 10946.5)
=0.22520796 / 0.22010688
=1.0232

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 - (3202.9 + 1650) / 7546.9) / (1 - (2807.4 + 1487.6) / 6901.6)
=0.35696776 / 0.37768054
=0.9452

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
=10946.5 / 10278.5
=1.065

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))
=(460.3 / (460.3 + 1487.6)) / (448.6 / (448.6 + 1650))
=0.23630577 / 0.21376156
=1.1055

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)
=(1260.9 / 10946.5) / (1119.6 / 10278.5)
=0.1151875 / 0.1089264
=1.0575

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)
=((3428.9 + 2348.4) / 7546.9) / ((3237.7 + 1934.1) / 6901.6)
=0.76551962 / 0.74936247
=1.0216

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
=(154.4 - -148.2 - 706.6) / 7546.9
=-0.0535

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.

RR Donnelley & Sons Co has a M-score of -2.61 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.

RR Donnelley & Sons Co Annual Data

Dec04Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13
DSRI 1.06091.03610.96971.07030.95980.97641.11580.88291.05750.9512
GMI 0.99480.94991.02711.02511.0161.06821.02430.99891.04031.0263
AQI 1.57041.0451.04940.93550.79561.04551.03481.00420.87990.8446
SGI 1.7111.1781.10511.24370.99950.85111.01641.05910.96331.0253
DEPI 1.04541.00660.93240.9880.90030.98411.00880.88040.99640.9827
SGAI 1.04750.94880.95070.9540.93761.04781.01541.03910.92581.0451
LVGI 0.70941.24290.92411.27851.13770.9581.03011.13121.12661.066
TATA -0.0733-0.0856-0.0365-0.1016-0.127-0.1642-0.0573-0.1219-0.1824-0.0517
M-score -1.81-2.77-2.53-2.77-3.23-3.34-2.61-3.17-3.37-2.82

RR Donnelley & Sons Co Quarterly Data

Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14
DSRI 0.92130.94291.01041.05751.00320.93170.92550.95121.05121.0839
GMI 1.01831.02941.03161.04031.03731.02951.03541.02631.02211.0232
AQI 0.9940.98990.98870.87990.90330.89980.86690.84460.94670.9452
SGI 1.03581.00530.97040.96330.970.98291.00991.02531.03711.065
DEPI 0.90180.91990.97710.99640.98030.97540.97020.98271.13941.1055
SGAI 0.97860.9470.91780.92580.95180.98241.02711.04511.06441.0575
LVGI 1.13921.04841.05681.12661.12421.10891.1051.0661.02121.0216
TATA -0.1157-0.1005-0.0912-0.1824-0.1803-0.1995-0.208-0.0517-0.0531-0.0535
M-score -3.11-3.00-2.92-3.37-3.40-3.55-3.59-2.82-2.66-2.61
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