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Office Depot Inc (NAS:ODP)
Beneish M-Score
-2.81 (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 -2.81 suggests that the company is not a manipulator.

ODP' s 10-Year Beneish M-Score Range
Min: -4.7   Max: -1.39
Current: -2.81

-4.7
-1.39

During the past 13 years, the highest Beneish M-Score of Office Depot Inc was -1.39. The lowest was -4.70. And the median was -2.72.


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 * 0.6622+0.528 * 0.9958+0.404 * 1.0253+0.892 * 1.4319+0.115 * 0.5613
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9387+4.679 * -0.0747-0.327 * 1.0752
=-2.81

* 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 $1,264 Mil.
Revenue was 3833 + 4069 + 3841 + 4354 = $16,097 Mil.
Gross Profit was 891 + 987 + 883 + 1015 = $3,776 Mil.
Total Current Assets was $4,218 Mil.
Total Assets was $6,844 Mil.
Property, Plant and Equipment(Net PPE) was $963 Mil.
Depreciation, Depletion and Amortization(DDA) was $313 Mil.
Selling, General & Admin. Expense(SGA) was $3,441 Mil.
Total Current Liabilities was $2,893 Mil.
Long-Term Debt was $1,513 Mil.
Net Income was -84 + 29 + -190 + -109 = $-354 Mil.
Non Operating Income was 1 + 1 + -2 + 1 = $1 Mil.
Cash Flow from Operations was 121 + 197 + -88 + -74 = $156 Mil.
Accounts Receivable was $1,333 Mil.
Revenue was 3485.673 + 2619.448 + 2418.619 + 2718.26 = $11,242 Mil.
Gross Profit was 787.291 + 632.743 + 546.269 + 659.697 = $2,626 Mil.
Total Current Assets was $4,396 Mil.
Total Assets was $7,477 Mil.
Property, Plant and Equipment(Net PPE) was $1,309 Mil.
Depreciation, Depletion and Amortization(DDA) was $209 Mil.
Selling, General & Admin. Expense(SGA) was $2,560 Mil.
Total Current Liabilities was $2,922 Mil.
Long-Term Debt was $1,555 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)
=(1264 / 16097) / (1333 / 11242)
=0.07852395 / 0.11857321
=0.6622

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)
=(987 / 11242) / (891 / 16097)
=0.23358833 / 0.23457787
=0.9958

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 - (4218 + 963) / 6844) / (1 - (4396 + 1309) / 7477)
=0.24298656 / 0.23699345
=1.0253

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
=16097 / 11242
=1.4319

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))
=(209 / (209 + 1309)) / (313 / (313 + 963))
=0.13768116 / 0.24529781
=0.5613

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)
=(3441 / 16097) / (2560 / 11242)
=0.21376654 / 0.22771749
=0.9387

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)
=((1513 + 2893) / 6844) / ((1555 + 2922) / 7477)
=0.64377557 / 0.59876956
=1.0752

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
=(-354 - 1 - 156) / 6844
=-0.0747

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 -2.81 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.

Office Depot Inc Annual Data

Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14
DSRI 0.89771.14290.98720.88981.06570.89740.90641.00091.57750.6623
GMI 1.02010.99351.06761.04940.98930.96790.96770.98221.29990.9957
AQI 1.00861.25071.04370.41530.74381.01261.22961.10432.07431.0253
SGI 1.05271.05131.03440.93350.83780.95790.98770.93091.05111.4318
DEPI 0.91571.03641.08841.07250.940.97810.92270.86231.39290.5613
SGAI 1.0310.92870.9861.08161.06590.96121.02751.01580.75920.9713
LVGI 1.05681.0840.91391.2751.00461.03990.96480.99520.94871.0752
TATA -0.0632-0.0553-0.0072-0.3741-0.1861-0.0618-0.0317-0.0695-0.0413-0.0745
M-score -2.84-2.47-2.40-4.70-3.56-2.92-2.65-2.85-1.40-2.82

Office Depot Inc Quarterly Data

Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14Dec14
DSRI 0.94391.00090.94480.98731.01831.57751.40721.27851.080.6622
GMI 0.96510.98221.05021.11941.20541.29991.23921.16451.08360.9958
AQI 1.18291.10431.08381.02440.36552.07431.92011.97025.60111.0253
SGI 0.96170.93090.92550.93440.93991.05111.22171.36811.51741.4319
DEPI 0.85560.86230.87120.90260.96061.39291.15770.99660.86860.5613
SGAI 1.00880.99980.96510.89630.83360.77130.78880.85610.90560.9387
LVGI 1.0160.99521.00411.02160.98910.94870.97110.98241.0051.0752
TATA -0.0856-0.0695-0.0906-0.0975-0.0739-0.0391-0.0576-0.0667-0.0646-0.0747
M-score -2.93-2.85-2.97-2.93-2.98-1.39-1.62-1.70-0.34-2.81
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