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RR Donnelley & Sons Co (NAS:RRD)
Beneish M-Score
-2.59 (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 -2.59 suggests that the company is not a manipulator.

RRD' s 10-Year Beneish M-Score Range
Min: -3.78   Max: -1.18
Current: -2.59

-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 -2.91.


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 * 1.0416+0.528 * 1.0109+0.404 * 0.9643+0.892 * 1.0871+0.115 * 1.0422
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0361+4.679 * -0.0443-0.327 * 1.0161
=-2.59

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

This Year (Sep14) TTM:Last Year (Sep13) TTM:
Accounts Receivable was $2,170 Mil.
Revenue was 2957.8 + 2902.5 + 2673.8 + 2755.3 = $11,289 Mil.
Gross Profit was 647.6 + 662.2 + 573.2 + 603.6 = $2,487 Mil.
Total Current Assets was $3,323 Mil.
Total Assets was $7,567 Mil.
Property, Plant and Equipment(Net PPE) was $1,580 Mil.
Depreciation, Depletion and Amortization(DDA) was $462 Mil.
Selling, General & Admin. Expense(SGA) was $1,304 Mil.
Total Current Liabilities was $2,416 Mil.
Long-Term Debt was $3,427 Mil.
Net Income was 62.2 + 64.7 + -29 + 104 = $202 Mil.
Non Operating Income was -2 + -2.3 + -81.7 + -18.2 = $-104 Mil.
Cash Flow from Operations was 184.2 + 150.1 + -80.4 + 387.7 = $642 Mil.
Accounts Receivable was $1,916 Mil.
Revenue was 2614.9 + 2571.6 + 2538.5 + 2659.6 = $10,385 Mil.
Gross Profit was 570.4 + 598.2 + 558.3 + 585.3 = $2,312 Mil.
Total Current Assets was $3,059 Mil.
Total Assets was $7,102 Mil.
Property, Plant and Equipment(Net PPE) was $1,451 Mil.
Depreciation, Depletion and Amortization(DDA) was $448 Mil.
Selling, General & Admin. Expense(SGA) was $1,158 Mil.
Total Current Liabilities was $2,157 Mil.
Long-Term Debt was $3,240 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)
=(2169.6 / 11289.4) / (1916.1 / 10384.6)
=0.19218028 / 0.18451361
=1.0416

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)
=(662.2 / 10384.6) / (647.6 / 11289.4)
=0.22265663 / 0.22025971
=1.0109

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 - (3323.4 + 1579.9) / 7566.9) / (1 - (3058.6 + 1450.9) / 7102)
=0.35200677 / 0.36503802
=0.9643

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
=11289.4 / 10384.6
=1.0871

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))
=(447.6 / (447.6 + 1450.9)) / (461.9 / (461.9 + 1579.9))
=0.23576508 / 0.22622196
=1.0422

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)
=(1303.9 / 11289.4) / (1157.6 / 10384.6)
=0.11549772 / 0.11147276
=1.0361

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)
=((3427.3 + 2415.7) / 7566.9) / ((3240.1 + 2157) / 7102)
=0.77217883 / 0.75994086
=1.0161

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
=(201.9 - -104.2 - 641.6) / 7566.9
=-0.0443

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 -2.59 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 1.06091.03610.96971.07010.96010.97641.11580.88291.05750.9512
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 -0.0733-0.0856-0.0365-0.1016-0.127-0.1642-0.0573-0.1223-0.1824-0.0517
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

Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14
DSRI 0.94291.02791.05751.00320.93170.9320.95121.05121.08391.0416
GMI 1.02941.03161.04031.03731.02951.03541.02631.02211.02321.0109
AQI 0.98990.98870.87990.90330.89980.86690.84460.94670.94520.9643
SGI 1.00530.97040.96330.970.98291.00991.02531.03711.0651.0871
DEPI 0.91990.97710.99640.98030.97540.97020.98271.13941.10551.0422
SGAI 0.9470.91780.92580.95180.98241.02711.04511.06441.05751.0361
LVGI 1.04841.05681.12661.12421.10891.1051.0661.02121.02161.0161
TATA -0.1036-0.0942-0.1854-0.1803-0.1995-0.208-0.0517-0.0531-0.0535-0.0443
M-score -3.02-2.92-3.38-3.40-3.55-3.58-2.82-2.66-2.61-2.59
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