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Office Depot Inc (NYSE:ODP)
Beneish M-Score
-1.70 (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.

Office Depot Inc has a M-score of -1.70 signals that the company is a manipulator.

ODP' s 10-Year Beneish M-Score Range
Min: -5.36   Max: -1.4
Current: -1.7

-5.36
-1.4

During the past 13 years, the highest Beneish M-Score of Office Depot Inc was -1.40. The lowest was -5.36. And the median was -2.70.


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 Office Depot 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 * 1.2785+0.528 * 1.1645+0.404 * 1.9702+0.892 * 1.3681+0.115 * 0.9973
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.8605+4.679 * -0.0666-0.327 * 0.9824
=-1.70

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

This Year (Jun14) TTM:Last Year (Jun13) TTM:
Accounts Receivable was $1,306 Mil.
Revenue was 3841 + 4354 + 3485.673 + 2619.448 = $14,300 Mil.
Gross Profit was 883 + 1015 + 787.291 + 632.743 = $3,318 Mil.
Total Current Assets was $4,181 Mil.
Total Assets was $6,973 Mil.
Property, Plant and Equipment(Net PPE) was $1,095 Mil.
Depreciation, Depletion and Amortization(DDA) was $268 Mil.
Selling, General & Admin. Expense(SGA) was $3,246 Mil.
Total Current Liabilities was $2,822 Mil.
Long-Term Debt was $1,534 Mil.
Net Income was -190 + -109 + -120.039 + 160.9 = $-258 Mil.
Non Operating Income was -2 + 1 + 0.267 + 382.131 = $381 Mil.
Cash Flow from Operations was -88 + -74 + 12.797 + -25.797 = $-175 Mil.
Accounts Receivable was $747 Mil.
Revenue was 2419 + 2718 + 2622.76 + 2692.933 = $10,453 Mil.
Gross Profit was 546 + 660 + 783.623 + 834.724 = $2,824 Mil.
Total Current Assets was $2,475 Mil.
Total Assets was $3,748 Mil.
Property, Plant and Equipment(Net PPE) was $810 Mil.
Depreciation, Depletion and Amortization(DDA) was $198 Mil.
Selling, General & Admin. Expense(SGA) was $2,757 Mil.
Total Current Liabilities was $1,908 Mil.
Long-Term Debt was $475 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)
=(1306 / 14300.121) / (746.645 / 10452.693)
=0.0913279 / 0.07143087
=1.2785

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)
=(1015 / 10452.693) / (883 / 14300.121)
=0.27020281 / 0.23202839
=1.1645

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 - (4181 + 1095) / 6973) / (1 - (2474.684 + 809.965) / 3747.565)
=0.24336727 / 0.12352448
=1.9702

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
=14300.121 / 10452.693
=1.3681

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))
=(197.567 / (197.567 + 809.965)) / (268 / (268 + 1095))
=0.19609005 / 0.19662509
=0.9973

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)
=(3246.033 / 14300.121) / (2757.446 / 10452.693)
=0.22699339 / 0.26380245
=0.8605

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)
=((1534 + 2822) / 6973) / ((475.004 + 1908.074) / 3747.565)
=0.62469525 / 0.63590038
=0.9824

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
=(-258.139 - 381.398 - -175) / 6973
=-0.0666

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.

Office Depot Inc has a M-score of -1.70 signals that the company is likely to 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.

Office Depot Inc Annual Data

Dec04Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13
DSRI 1.06790.89771.14290.98720.88981.06570.89740.90641.00091.5775
GMI 0.99911.02010.98921.07231.04940.98930.96790.96770.98221.2999
AQI 0.95191.00461.24821.04570.41530.74381.01261.22961.10432.0743
SGI 1.09761.05271.05131.03440.93350.83780.95790.98770.93091.0511
DEPI 1.07070.91571.03641.08841.07250.940.97810.92270.86231.3929
SGAI 0.99731.0310.92870.9861.08161.06590.96121.02751.01580.7592
LVGI 0.9361.05281.08190.91571.2751.00461.03990.96480.99520.9487
TATA -0.0418-0.0632-0.0532-0.0072-0.3745-0.1861-0.0618-0.0317-0.0695-0.0413
M-score -2.52-2.84-2.47-2.40-4.70-3.56-2.92-2.65-2.85-1.40

Office Depot Inc Quarterly Data

Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14
DSRI 0.89280.87530.94391.00090.94480.98731.01831.57751.40711.2785
GMI 0.95580.95910.96510.98221.051.11941.20541.29991.23951.1645
AQI 1.08911.13721.18291.10431.08381.02440.36552.07431.92011.9702
SGI 0.98750.9690.96170.93090.92550.93440.93991.05111.22171.3681
DEPI 0.89790.88870.85560.86230.86970.90230.96061.39291.16140.9973
SGAI 1.01081.01631.00880.99980.96390.89180.82910.76710.78680.8605
LVGI 0.96550.98671.0160.99521.00411.02160.98910.94870.97110.9824
TATA -0.0171-0.0303-0.0856-0.0695-0.0906-0.1021-0.0786-0.0414-0.06-0.0666
M-score -2.66-2.74-2.93-2.85-2.97-2.95-3.00-1.40-1.63-1.70
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