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RR Donnelley & Sons Co (NAS:RRD)
Beneish M-Score
-2.63 (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 -2.63 suggests that the company is not a manipulator.

RRD' s 10-Year Beneish M-Score Range
Min: -3.41   Max: -1.94
Current: -2.63

-3.41
-1.94

During the past 13 years, the highest Beneish M-Score of RR Donnelley & Sons Co was -1.94. The lowest was -3.41. And the median was -2.96.


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 * 1.0025+0.528 * 1.0116+0.404 * 1.1601+0.892 * 1.1072+0.115 * 0.9803
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0909+4.679 * -0.0679-0.327 * 0.9444
=-2.63

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

This Year (Dec14) TTM:Last Year (Dec13) TTM:
Accounts Receivable was $2,034 Mil.
Revenue was 3069.3 + 2957.8 + 2902.5 + 2673.8 = $11,603 Mil.
Gross Profit was 667.6 + 647.6 + 662.2 + 573.2 = $2,551 Mil.
Total Current Assets was $3,373 Mil.
Total Assets was $7,639 Mil.
Property, Plant and Equipment(Net PPE) was $1,516 Mil.
Depreciation, Depletion and Amortization(DDA) was $474 Mil.
Selling, General & Admin. Expense(SGA) was $1,427 Mil.
Total Current Liabilities was $2,367 Mil.
Long-Term Debt was $3,429 Mil.
Net Income was 19.5 + 62.2 + 64.7 + -29 = $117 Mil.
Non Operating Income was -0.7 + -2 + -2.3 + -81.7 = $-87 Mil.
Cash Flow from Operations was 468.8 + 184.2 + 150.1 + -80.4 = $723 Mil.
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.



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)
=(2033.8 / 11603.4) / (1832.3 / 10480.3)
=0.17527621 / 0.17483278
=1.0025

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)
=(647.6 / 10480.3) / (667.6 / 11603.4)
=0.22236959 / 0.21981488
=1.0116

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 - (3373.3 + 1515.5) / 7639.3) / (1 - (3561.6 + 1430.1) / 7238.2)
=0.36004608 / 0.31036722
=1.1601

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
=11603.4 / 10480.3
=1.1072

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))
=(435.8 / (435.8 + 1430.1)) / (474 / (474 + 1515.5))
=0.23356021 / 0.23825082
=0.9803

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)
=(1427 / 11603.4) / (1181.5 / 10480.3)
=0.1229812 / 0.11273532
=1.0909

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)
=((3429.1 + 2367.3) / 7639.3) / ((3587 + 2228.7) / 7238.2)
=0.75876062 / 0.80347324
=0.9444

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
=(117.4 - -86.7 - 722.7) / 7639.3
=-0.0679

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 -2.63 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

Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14Dec14
DSRI 1.02791.05751.00320.93170.9320.95121.05121.08391.04161.0025
GMI 1.03161.04031.03731.02951.03541.02631.02211.02321.01091.0116
AQI 0.98870.87990.90330.89980.86690.84460.94670.94520.96431.1601
SGI 0.97040.96330.970.98291.00991.02531.03711.0651.08711.1072
DEPI 0.97710.99640.98030.97540.97020.98271.13941.10551.04220.9803
SGAI 0.91780.92580.95180.98241.02711.04511.06441.05751.03611.0909
LVGI 1.05681.12661.12421.10891.1051.0661.02121.02161.01610.9444
TATA -0.0912-0.1824-0.1803-0.1995-0.208-0.0517-0.0531-0.0535-0.0443-0.0679
M-score -2.90-3.37-3.40-3.55-3.58-2.82-2.66-2.61-2.59-2.63
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