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RR Donnelley & Sons Co (NAS:RRD)
Beneish M-Score
-2.84 (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 -2.84 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: -2.84

-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 -2.87.


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 * 0.9405+0.528 * 1.0105+0.404 * 1.058+0.892 * 1.009+0.115 * 0.9683
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0711+4.679 * -0.0709-0.327 * 0.9823
=-2.84

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

This Year (Sep15) TTM:Last Year (Sep14) TTM:
Accounts Receivable was $2,059 Mil.
Revenue was 2828 + 2748.1 + 2746.1 + 3069.3 = $11,392 Mil.
Gross Profit was 619.9 + 615.8 + 579.7 + 667.6 = $2,483 Mil.
Total Current Assets was $3,185 Mil.
Total Assets was $7,471 Mil.
Property, Plant and Equipment(Net PPE) was $1,504 Mil.
Depreciation, Depletion and Amortization(DDA) was $459 Mil.
Selling, General & Admin. Expense(SGA) was $1,409 Mil.
Total Current Liabilities was $2,450 Mil.
Long-Term Debt was $3,216 Mil.
Net Income was 14.3 + 43.5 + 22.3 + 19.5 = $100 Mil.
Non Operating Income was -3 + -11.9 + -28.3 + -0.7 = $-44 Mil.
Cash Flow from Operations was 143.2 + 205.3 + -144.3 + 468.8 = $673 Mil.
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.



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)
=(2059 / 11391.5) / (2169.6 / 11289.4)
=0.1807488 / 0.19218028
=0.9405

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)
=(615.8 / 11289.4) / (619.9 / 11391.5)
=0.22025971 / 0.21796954
=1.0105

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 - (3184.5 + 1504) / 7470.6) / (1 - (3323.4 + 1579.9) / 7566.9)
=0.3724065 / 0.35200677
=1.058

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
=11391.5 / 11289.4
=1.009

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))
=(461.9 / (461.9 + 1579.9)) / (458.5 / (458.5 + 1504))
=0.22622196 / 0.23363057
=0.9683

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)
=(1409.2 / 11391.5) / (1303.9 / 11289.4)
=0.12370627 / 0.11549772
=1.0711

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)
=((3216.1 + 2450.3) / 7470.6) / ((3427.3 + 2415.7) / 7566.9)
=0.75849329 / 0.77217883
=0.9823

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
=(99.6 - -43.9 - 673) / 7470.6
=-0.0709

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 -2.84 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

Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14
DSRI 1.03610.96971.07010.96010.97641.11580.88291.05750.95121.0025
GMI 0.94991.02711.02511.0161.06821.02430.99891.04031.02631.0116
AQI 1.0451.04940.93550.79561.04551.03481.00420.87990.84461.1601
SGI 1.1781.10511.24370.99950.85111.01641.05910.96331.02531.1072
DEPI 1.00660.93240.9880.90030.98411.00880.88040.99640.98270.9803
SGAI 0.94880.95070.9540.93761.04781.01541.03910.92581.04511.0909
LVGI 1.24290.92411.27851.13770.9581.03011.13121.12661.0660.9444
TATA -0.0856-0.0365-0.1016-0.127-0.1642-0.0573-0.1223-0.1824-0.0517-0.0679
M-score -2.77-2.53-2.77-3.23-3.34-2.61-3.17-3.37-2.82-2.63

RR Donnelley & Sons Co Quarterly Data

Jun13Sep13Dec13Mar14Jun14Sep14Dec14Mar15Jun15Sep15
DSRI 0.93170.9320.95121.05121.08391.04161.00250.89240.90160.9405
GMI 1.02951.03541.02631.02211.02321.01091.01161.00881.011.0105
AQI 0.89980.86690.84460.94670.94520.96431.16011.051.05031.058
SGI 0.98291.00991.02531.03711.0651.08711.10721.09991.05251.009
DEPI 0.97540.97020.98271.13941.10551.04220.98030.83640.94130.9683
SGAI 0.98241.02711.04511.06441.05751.03611.09091.07791.06641.0711
LVGI 1.10891.1051.0661.02121.02161.01610.94440.98820.97380.9823
TATA -0.1995-0.208-0.0517-0.0531-0.0535-0.0443-0.0679-0.0634-0.0699-0.0709
M-score -3.55-3.58-2.82-2.66-2.61-2.59-2.63-2.79-2.83-2.84
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