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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 USD 2,059 Mil.
Revenue was 2828 + 2748.1 + 2746.1 + 3069.3 = USD 11,392 Mil.
Gross Profit was 619.9 + 615.8 + 579.7 + 667.6 = USD 2,483 Mil.
Total Current Assets was USD 3,185 Mil.
Total Assets was USD 7,471 Mil.
Property, Plant and Equipment(Net PPE) was USD 1,504 Mil.
Depreciation, Depletion and Amortization(DDA) was USD 459 Mil.
Selling, General & Admin. Expense(SGA) was USD 1,409 Mil.
Total Current Liabilities was USD 2,450 Mil.
Long-Term Debt was USD 3,216 Mil.
Net Income was 14.3 + 43.5 + 22.3 + 19.5 = USD 100 Mil.
Non Operating Income was -3 + -11.9 + -28.3 + -0.7 = USD -44 Mil.
Cash Flow from Operations was 143.2 + 205.3 + -144.3 + 468.8 = USD 673 Mil.
Accounts Receivable was USD 2,170 Mil.
Revenue was 2957.8 + 2902.5 + 2673.8 + 2755.3 = USD 11,289 Mil.
Gross Profit was 647.6 + 662.2 + 573.2 + 603.6 = USD 2,487 Mil.
Total Current Assets was USD 3,323 Mil.
Total Assets was USD 7,567 Mil.
Property, Plant and Equipment(Net PPE) was USD 1,580 Mil.
Depreciation, Depletion and Amortization(DDA) was USD 462 Mil.
Selling, General & Admin. Expense(SGA) was USD 1,304 Mil.
Total Current Liabilities was USD 2,416 Mil.
Long-Term Debt was USD 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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