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GuruFocus has detected 6 Warning Signs with Renewable Energy Group Inc $REGI.
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Renewable Energy Group Inc (NAS:REGI)
Beneish M-Score
-2.26 (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.

Renewable Energy Group Inc has a M-score of -2.26 suggests that the company is not a manipulator.

REGI' s Beneish M-Score Range Over the Past 10 Years
Min: -3.29   Max: 0.43
Current: -2.26

-3.29
0.43

During the past 9 years, the highest Beneish M-Score of Renewable Energy Group Inc was 0.43. The lowest was -3.29. And the median was -2.26.


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 Renewable Energy Group Inc 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 * 0.3708+0.528 * 1.2434+0.404 * 0.4808+0.892 * 1.4868+0.115 * 0.8344
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.8119+4.679 * 0.0806-0.327 * 0.8402
=-2.26

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

This Year (Mar17) TTM:Last Year (Mar16) TTM:
Accounts Receivable was $59 Mil.
Revenue was 418.893 + 560.421 + 624.64 + 558.301 = $2,162 Mil.
Gross Profit was 17.283 + 81.92 + 47.348 + 24.862 = $171 Mil.
Total Current Assets was $361 Mil.
Total Assets was $1,041 Mil.
Property, Plant and Equipment(Net PPE) was $608 Mil.
Depreciation, Depletion and Amortization(DDA) was $34 Mil.
Selling, General & Admin. Expense(SGA) was $91 Mil.
Total Current Liabilities was $160 Mil.
Long-Term Debt was $236 Mil.
Net Income was -15.914 + 20.197 + 23.442 + 7.016 = $35 Mil.
Non Operating Income was -1.081 + 4.127 + 1.575 + 12.167 = $17 Mil.
Cash Flow from Operations was 21.976 + 4.165 + 77.678 + -169.826 = $-66 Mil.
Accounts Receivable was $106 Mil.
Revenue was 297.87 + 387.808 + 394.856 + 373.762 = $1,454 Mil.
Gross Profit was 17.384 + 105.659 + 4.405 + 15.907 = $143 Mil.
Total Current Assets was $447 Mil.
Total Assets was $1,224 Mil.
Property, Plant and Equipment(Net PPE) was $601 Mil.
Depreciation, Depletion and Amortization(DDA) was $28 Mil.
Selling, General & Admin. Expense(SGA) was $76 Mil.
Total Current Liabilities was $287 Mil.
Long-Term Debt was $268 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)
=(58.631 / 2162.255) / (106.35 / 1454.296)
=0.02711567 / 0.07312817
=0.3708

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)
=(143.355 / 1454.296) / (171.413 / 2162.255)
=0.09857347 / 0.07927511
=1.2434

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 - (360.715 + 608.267) / 1041.087) / (1 - (447.456 + 600.53) / 1224.357)
=0.06925934 / 0.14405194
=0.4808

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
=2162.255 / 1454.296
=1.4868

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))
=(27.676 / (27.676 + 600.53)) / (33.905 / (33.905 + 608.267))
=0.04405561 / 0.05279738
=0.8344

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)
=(91.415 / 2162.255) / (75.733 / 1454.296)
=0.04227762 / 0.05207537
=0.8119

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)
=((235.95 + 160.417) / 1041.087) / ((268.04 + 286.745) / 1224.357)
=0.38072419 / 0.45312356
=0.8402

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
=(34.741 - 16.788 - -66.007) / 1041.087
=0.0806

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.

Renewable Energy Group Inc has a M-score of -2.26 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 local exchange's currency.

Renewable Energy Group Inc Annual Data

Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15Dec16
DSRI 0.93920.73820.27653.12134.17940.96830.3608
GMI 0.22450.64742.68670.35951.26761.58240.9483
AQI 2.04180.53930.94090.69441.83590.56020.4611
SGI 1.6463.80691.23181.47590.85031.08911.4713
DEPI 1.28870.87751.2681.00510.99110.72850.8194
SGAI 0.52720.40820.99850.73281.60731.07520.8175
LVGI 1.13270.81160.55091.10552.22091.14240.9104
TATA 0.01130.0638-0.07030.06250.0313-0.1943-0.0429
M-score -1.82-0.14-2.22-0.260.43-3.30-3.05

Renewable Energy Group Inc Quarterly Data

Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16Dec16Mar17
DSRI 4.17941.85911.30631.4560.96831.84271.31771.44560.36080.3708
GMI 1.26761.09450.91610.82281.59351.04831.08370.82520.94171.2434
AQI 1.83591.36550.98640.93670.56020.52010.49790.24030.46110.4808
SGI 0.85030.8850.94691.00781.08911.13111.23541.39751.47131.4868
DEPI 0.99110.87390.59810.62030.72850.82150.88150.85530.81940.8344
SGAI 1.60731.59791.52091.48481.06390.98890.93060.79490.82610.8119
LVGI 2.22092.72921.03281.09441.14241.14981.33711.06350.91040.8402
TATA 0.0313-0.1036-0.0307-0.0511-0.1943-0.1707-0.1319-0.137-0.04650.0806
M-score 0.43-2.76-2.59-2.57-3.29-2.62-2.87-2.76-3.08-2.26
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