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R.R. Donnelley & Sons Company (NAS:RRD)
Beneish M-Score
-2.82 (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 Company has a M-score of -2.82 suggests that the company is not a manipulator.

RRD' s 10-Year Beneish M-Score Range
Min: -3.41   Max: -1.94
Current: -2.82

-3.41
-1.94

During the past 13 years, the highest Beneish M-Score of R.R. Donnelley & Sons Company was -1.94. The lowest was -3.41. And the median was -2.98.


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 Company 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 * 0.9512+0.528 * 1.0263+0.404 * 0.8446+0.892 * 1.0253+0.115 * 0.9827
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0451+4.679 * -0.0517-0.327 * 1.066
=-2.82

* 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 $1,832 Mil.
Revenue was 2755.3 + 2614.9 + 2571.6 + 2538.5 = $10,480 Mil.
Gross Profit was 603.6 + 570.4 + 598.2 + 558.3 = $2,331 Mil.
Total Current Assets was $3,562 Mil.
Total Assets was $7,238 Mil.
Property, Plant and Equipment(Net PPE) was $1,430 Mil.
Depreciation, Depletion and Amortization(DDA) was $436 Mil.
Selling, General & Admin. Expense(SGA) was $1,182 Mil.
Total Current Liabilities was $2,229 Mil.
Long-Term Debt was $3,587 Mil.
Net Income was 104 + 14.7 + 65.4 + 27.1 = $211 Mil.
Non Operating Income was -18.2 + -46 + -6 + -39.1 = $-109 Mil.
Cash Flow from Operations was 387.7 + 249.2 + 153.7 + -95.8 = $695 Mil.
Accounts Receivable was $1,879 Mil.
Revenue was 2659.6 + 2508.8 + 2528.6 + 2524.9 = $10,222 Mil.
Gross Profit was 585.3 + 573 + 594.7 + 579.9 = $2,333 Mil.
Total Current Assets was $2,977 Mil.
Total Assets was $7,263 Mil.
Property, Plant and Equipment(Net PPE) was $1,617 Mil.
Depreciation, Depletion and Amortization(DDA) was $482 Mil.
Selling, General & Admin. Expense(SGA) was $1,103 Mil.
Total Current Liabilities was $2,054 Mil.
Long-Term Debt was $3,420 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)
=(1832.3 / 10480.3) / (1878.8 / 10221.9)
=0.17483278 / 0.18380145
=0.9512

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)
=(570.4 / 10221.9) / (603.6 / 10480.3)
=0.22822567 / 0.22236959
=1.0263

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 - (3561.6 + 1430.1) / 7238.2) / (1 - (2977.4 + 1616.6) / 7262.7)
=0.31036722 / 0.36745288
=0.8446

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
=10480.3 / 10221.9
=1.0253

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))
=(481.6 / (481.6 + 1616.6)) / (435.8 / (435.8 + 1430.1))
=0.22953007 / 0.23356021
=0.9827

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)
=(1181.5 / 10480.3) / (1102.6 / 10221.9)
=0.11273532 / 0.10786644
=1.0451

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)
=((3587 + 2228.7) / 7238.2) / ((3420.2 + 2053.9) / 7262.7)
=0.80347324 / 0.75372795
=1.066

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
=(211.2 - -109.3 - 694.8) / 7238.2
=-0.0517

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 Company has a M-score of -2.82 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 Company 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

R.R. Donnelley & Sons Company Quarterly Data

Sep11Dec11Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13
DSRI 1.06030.88290.92130.94291.01041.05751.00320.93170.92550.9512
GMI 0.99970.99891.01831.02941.03161.04031.03731.02951.03541.0263
AQI 1.10371.00420.9940.98990.98870.87990.90330.89980.86690.8446
SGI 1.0711.05911.03581.00530.97040.96330.970.98291.00991.0253
DEPI 0.93320.88040.90180.91990.97710.99640.98030.97540.97020.9827
SGAI 1.07871.03910.97860.9470.91780.92580.95180.98241.02711.0451
LVGI 1.11751.13121.13921.04841.05681.12661.12421.10891.1051.066
TATA -0.0509-0.122-0.1157-0.1005-0.0912-0.1824-0.1803-0.1995-0.208-0.0517
M-score -2.62-3.17-3.11-3.00-2.92-3.37-3.40-3.55-3.59-2.82
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