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R.R.Donnelley & Sons Co (NAS:RRD)
Beneish M-Score
-2.75 (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.

R.R.Donnelley & Sons Co has a M-score of -2.75 suggests that the company is not a manipulator.

RRD' s Beneish M-Score Range Over the Past 10 Years
Min: -3.78   Max: -1.18
Current: -2.75

-3.78
-1.18

During the past 13 years, the highest Beneish M-Score of R.R.Donnelley & Sons Co was -1.18. The lowest was -3.78. And the median was -2.86.


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 R.R.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 * 1.0286+0.528 * 0.9963+0.404 * 1.0283+0.892 * 0.956+0.115 * 1.0174
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9439+4.679 * -0.0592-0.327 * 0.999
=-2.75

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

This Year (Mar16) TTM:Last Year (Mar15) TTM:
Accounts Receivable was $1,949 Mil.
Revenue was 2651.4 + 2934.6 + 2828 + 2748.1 = $11,162 Mil.
Gross Profit was 569.3 + 648.6 + 619.9 + 615.8 = $2,454 Mil.
Total Current Assets was $2,937 Mil.
Total Assets was $7,086 Mil.
Property, Plant and Equipment(Net PPE) was $1,412 Mil.
Depreciation, Depletion and Amortization(DDA) was $448 Mil.
Selling, General & Admin. Expense(SGA) was $1,301 Mil.
Total Current Liabilities was $2,423 Mil.
Long-Term Debt was $2,943 Mil.
Net Income was 39.8 + 71 + 14.3 + 43.5 = $169 Mil.
Non Operating Income was 0 + -0.4 + -3 + -11.9 = $-15 Mil.
Cash Flow from Operations was -192.8 + 447.8 + 143.2 + 205.3 = $604 Mil.
Accounts Receivable was $1,982 Mil.
Revenue was 2746.1 + 3069.3 + 2957.8 + 2902.5 = $11,676 Mil.
Gross Profit was 579.7 + 667.6 + 647.6 + 662.2 = $2,557 Mil.
Total Current Assets was $3,044 Mil.
Total Assets was $7,205 Mil.
Property, Plant and Equipment(Net PPE) was $1,456 Mil.
Depreciation, Depletion and Amortization(DDA) was $472 Mil.
Selling, General & Admin. Expense(SGA) was $1,441 Mil.
Total Current Liabilities was $2,031 Mil.
Long-Term Debt was $3,431 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)
=(1948.6 / 11162.1) / (1981.6 / 11675.7)
=0.17457289 / 0.16972002
=1.0286

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)
=(648.6 / 11675.7) / (569.3 / 11162.1)
=0.21901042 / 0.21981527
=0.9963

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 - (2937 + 1412.4) / 7086.1) / (1 - (3043.7 + 1455.5) / 7205.3)
=0.3862068 / 0.37557076
=1.0283

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
=11162.1 / 11675.7
=0.956

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))
=(471.9 / (471.9 + 1455.5)) / (447.6 / (447.6 + 1412.4))
=0.24483761 / 0.24064516
=1.0174

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)
=(1300.7 / 11162.1) / (1441.4 / 11675.7)
=0.11652825 / 0.12345298
=0.9439

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)
=((2942.9 + 2423.1) / 7086.1) / ((3431 + 2030.9) / 7205.3)
=0.75725717 / 0.75803922
=0.999

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
=(168.6 - -15.3 - 603.5) / 7086.1
=-0.0592

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.

R.R.Donnelley & Sons Co has a M-score of -2.75 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.

R.R.Donnelley & Sons Co Annual Data

Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15
DSRI 0.96971.07010.96010.97641.11580.88291.05750.95121.00251.0139
GMI 1.02711.02511.0161.06821.02430.99891.04031.02631.01161.0042
AQI 1.04940.93550.79561.04551.03481.00420.87990.84461.16011.0414
SGI 1.10511.24370.99950.85111.01641.05910.96331.02531.10720.9701
DEPI 0.93240.9880.90030.98411.00880.88040.99640.98270.98030.9982
SGAI 0.95070.9540.93761.04781.01541.03910.92581.04511.09090.9391
LVGI 0.92411.27851.13770.9581.03011.13121.12661.0660.94441.0004
TATA -0.0365-0.1016-0.1267-0.1642-0.0819-0.1223-0.1824-0.0517-0.0679-0.0628
M-score -2.53-2.77-3.23-3.34-2.73-3.17-3.37-2.82-2.63-2.76

R.R.Donnelley & Sons Co Quarterly Data

Dec13Mar14Jun14Sep14Dec14Mar15Jun15Sep15Dec15Mar16
DSRI 0.95121.05121.08391.04161.00250.89240.90160.94051.01391.0286
GMI 1.02631.02211.02321.01091.01161.00881.011.01051.00420.9963
AQI 0.84460.94670.94520.96431.16011.051.05031.0581.04141.0283
SGI 1.02531.03711.0651.08711.10721.09991.05251.0090.97010.956
DEPI 0.98271.13941.10551.04220.98030.83640.94130.96830.99821.0174
SGAI 1.04511.06441.05751.03611.09091.07791.06641.07110.93910.9439
LVGI 1.0661.02121.02161.01610.94440.98820.97380.98231.00040.999
TATA -0.0517-0.0531-0.0535-0.0443-0.0679-0.0634-0.0699-0.0709-0.0628-0.0592
M-score -2.82-2.66-2.61-2.59-2.63-2.79-2.83-2.84-2.76-2.75
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