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RR Donnelley & Sons Co (NAS:RRD)
Beneish M-Score
-2.83 (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 -2.83 suggests that the company is not a manipulator.

RRD' s 10-Year Beneish M-Score Range
Min: -3.78   Max: -1.18
Current: -2.83

-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 -2.88.


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 * 0.9016+0.528 * 1.01+0.404 * 1.0503+0.892 * 1.0525+0.115 * 0.9413
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0664+4.679 * -0.0699-0.327 * 0.9738
=-2.83

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

This Year (Jun15) TTM:Last Year (Jun14) TTM:
Accounts Receivable was $1,977 Mil.
Revenue was 2748.1 + 2746.1 + 3069.3 + 2957.8 = $11,521 Mil.
Gross Profit was 615.8 + 579.7 + 667.6 + 647.6 = $2,511 Mil.
Total Current Assets was $3,108 Mil.
Total Assets was $7,492 Mil.
Property, Plant and Equipment(Net PPE) was $1,575 Mil.
Depreciation, Depletion and Amortization(DDA) was $463 Mil.
Selling, General & Admin. Expense(SGA) was $1,415 Mil.
Total Current Liabilities was $2,151 Mil.
Long-Term Debt was $3,434 Mil.
Net Income was 43.5 + 22.3 + 19.5 + 62.2 = $148 Mil.
Non Operating Income was -11.9 + -28.3 + -0.7 + -2 = $-43 Mil.
Cash Flow from Operations was 205.3 + -144.3 + 468.8 + 184.2 = $714 Mil.
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.



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)
=(1976.9 / 11521.3) / (2083.3 / 10946.5)
=0.17158654 / 0.19031654
=0.9016

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)
=(579.7 / 10946.5) / (615.8 / 11521.3)
=0.22010688 / 0.21791812
=1.01

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 - (3108.1 + 1575.2) / 7492.4) / (1 - (3202.9 + 1650) / 7546.9)
=0.37492659 / 0.35696776
=1.0503

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
=11521.3 / 10946.5
=1.0525

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))
=(448.6 / (448.6 + 1650)) / (462.8 / (462.8 + 1575.2))
=0.21376156 / 0.22708538
=0.9413

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)
=(1415.2 / 11521.3) / (1260.9 / 10946.5)
=0.12283336 / 0.1151875
=1.0664

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)
=((3434.1 + 2151.2) / 7492.4) / ((3428.9 + 2348.4) / 7546.9)
=0.74546207 / 0.76551962
=0.9738

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
=(147.5 - -42.9 - 714) / 7492.4
=-0.0699

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 -2.83 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 -0.0856-0.0365-0.1016-0.127-0.1642-0.0573-0.1219-0.1824-0.0517-0.0679
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

Mar13Jun13Sep13Dec13Mar14Jun14Sep14Dec14Mar15Jun15
DSRI 1.00320.93170.9320.95121.05121.08391.04161.00250.89240.9016
GMI 1.03731.02951.03541.02631.02211.02321.01091.01161.00881.01
AQI 0.90330.89980.86690.84460.94670.94520.96431.16011.051.0503
SGI 0.970.98291.00991.02531.03711.0651.08711.10721.09991.0525
DEPI 0.98030.97540.97020.98271.13941.10551.04220.98030.83640.9413
SGAI 0.95180.98241.02711.04511.06441.05751.03611.09091.07791.0664
LVGI 1.12421.10891.1051.0661.02121.02161.01610.94440.98820.9738
TATA -0.1803-0.1995-0.208-0.0517-0.0531-0.0535-0.0443-0.0679-0.0634-0.0699
M-score -3.40-3.55-3.58-2.82-2.66-2.61-2.59-2.63-2.79-2.83
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