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Royal Dutch Shell PLC  (NYSE:RDS.A) Beneish M-Score: -2.68 (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.

Royal Dutch Shell PLC has a M-score of -2.69 suggests that the company is not a manipulator.

NYSE:RDS.A' s Beneish M-Score Range Over the Past 10 Years
Min: -3.35   Max: -0.26
Current: -2.68

-3.35
-0.26

During the past 13 years, the highest Beneish M-Score of Royal Dutch Shell PLC was -0.26. The lowest was -3.35. And the median was -2.70.


Historical Data

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

* Premium members only.

Royal Dutch Shell PLC Annual Data

Dec07 Dec08 Dec09 Dec10 Dec11 Dec12 Dec13 Dec14 Dec15 Dec16
Beneish M-Score Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only -3.14 -2.29 -3.35 -3.07 -2.15

Royal Dutch Shell PLC Quarterly Data

Dec12 Mar13 Jun13 Sep13 Dec13 Mar14 Jun14 Sep14 Dec14 Mar15 Jun15 Sep15 Dec15 Mar16 Jun16 Sep16 Dec16 Mar17 Jun17 Sep17
Beneish M-Score Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only -2.40 -2.15 -2.73 -2.78 -2.68

Competitive Comparison
* Competitive companies are chosen from companies within the same industry, with headquarter located in same country, with closest market capitalization; x-axis shows the market cap, and y-axis shows the term value; the bigger the dot, the larger the market cap.


Calculation

The M-score was created by Professor Messod Beneish. Instead of measuring the bankruptcy risk (Altman Z-Score) or business trend (Piotroski 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 Royal Dutch Shell PLC 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 * 0.8128+0.528 * 0.9206+0.404 * 1.0082+0.892 * 1.2476+0.115 * 0.8542
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.6833+4.679 * -0.0569-0.327 * 0.9721
=-2.69

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

This Year (Sep17) TTM:Last Year (Sep16) TTM:
Accounts Receivable was $47,206 Mil.
Revenue was 77733 + 72702 + 73311 + 67092 = $290,838 Mil.
Gross Profit was 16387 + 12531 + 15387 + 14861 = $59,166 Mil.
Total Current Assets was $91,924 Mil.
Total Assets was $413,082 Mil.
Property, Plant and Equipment(Net PPE) was $230,360 Mil.
Depreciation, Depletion and Amortization(DDA) was $26,985 Mil.
Selling, General, & Admin. Expense(SGA) was $10,468 Mil.
Total Current Liabilities was $74,920 Mil.
Long-Term Debt & Capital Lease Obligation was $79,681 Mil.
Net Income was 4087 + 1545 + 3538 + 1541 = $10,711 Mil.
Non-Recurring Items was -841 + 360 + -317 + -2539 = $-3,337 Mil.
Cash Flow from Operations was 7582 + 11285 + 9508 + 9170 = $37,545 Mil.
Accounts Receivable was $46,552 Mil.
Revenue was 62938 + 60271 + 49732 + 60176 = $233,117 Mil.
Gross Profit was 12650 + 11833 + 9681 + 9495 = $43,659 Mil.
Total Current Assets was $87,098 Mil.
Total Assets was $419,648 Mil.
Property, Plant and Equipment(Net PPE) was $241,059 Mil.
(DDA) was $23,716 Mil.
Selling, General, & Admin. Expense(SGA) was $12,279 Mil.
Total Current Liabilities was $74,937 Mil.
Long-Term Debt & Capital Lease Obligation was $86,637 Mil.




1. DSRI = Days Sales in Receivables Index

Measured as the ratio of Revenue in Accounts Receivable 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)
=(47206 / 290838) / (46552 / 233117)
=0.16231029 / 0.19969372
=0.8128

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)
=(43659 / 233117) / (59166 / 290838)
=0.18728364 / 0.20343284
=0.9206

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 Property, Plant and Equipment to Total Assets.

AQI=(1 - (CurrentAssets_t + PPE_t) / TotalAssets_t) / (1 - (CurrentAssets_t-1 + PPE_t-1) / TotalAssets_t-1)
=(1 - (91924 + 230360) / 413082) / (1 - (87098 + 241059) / 419648)
=0.21980624 / 0.21801843
=1.0082

4. SGI = Sales Growth Index

Ratio of Revenue 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
=290838 / 233117
=1.2476

5. DEPI = Depreciation Index

Measured as the ratio of the rate of Depreciation, Depletion and Amortization 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))
=(23716 / (23716 + 241059)) / (26985 / (26985 + 230360))
=0.08957039 / 0.10485924
=0.8542

6. SGAI = Sales, General and Administrative expenses Index

The ratio of c 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)
=(10468 / 290838) / (12279 / 233117)
=0.03599255 / 0.05267312
=0.6833

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)
=((79681 + 74920) / 413082) / ((86637 + 74937) / 419648)
=0.37426225 / 0.38502269
=0.9721

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
=(10711 - -3337 - 37545) / 413082
=-0.0569

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.

Royal Dutch Shell PLC has a M-score of -2.69 suggests that the company will not be a manipulator.


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