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Office Depot Inc (NAS:ODP)
Beneish M-Score
-2.65 (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 -2.65 suggests that the company is not a manipulator.

ODP' s Beneish M-Score Range Over the Past 10 Years
Min: -5.36   Max: -0.4
Current: -2.65

-5.36
-0.4

During the past 13 years, the highest Beneish M-Score of Office Depot Inc was -0.40. The lowest was -5.36. And the median was -2.71.


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 * 0.9835+0.528 * 0.9906+0.404 * 0.9913+0.892 * 0.9153+0.115 * 1.0944
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9923+4.679 * -0.0212-0.327 * 0.9595
=-2.65

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

This Year (Jun16) TTM:Last Year (Jun15) TTM:
Accounts Receivable was $1,055 Mil.
Revenue was 3218 + 3544 + 3478 + 3690 = $13,930 Mil.
Gross Profit was 747 + 856 + 814 + 936 = $3,353 Mil.
Total Current Assets was $3,845 Mil.
Total Assets was $6,173 Mil.
Property, Plant and Equipment(Net PPE) was $750 Mil.
Depreciation, Depletion and Amortization(DDA) was $243 Mil.
Selling, General & Admin. Expense(SGA) was $2,921 Mil.
Total Current Liabilities was $2,289 Mil.
Long-Term Debt was $1,425 Mil.
Net Income was 210 + 46 + 15 + 6 = $277 Mil.
Non Operating Income was 0 + 0 + 0 + -1 = $-1 Mil.
Cash Flow from Operations was 287 + -139 + 126 + 135 = $409 Mil.
Accounts Receivable was $1,172 Mil.
Revenue was 3440 + 3877 + 3833 + 4069 = $15,219 Mil.
Gross Profit was 814 + 937 + 891 + 987 = $3,629 Mil.
Total Current Assets was $3,878 Mil.
Total Assets was $6,360 Mil.
Property, Plant and Equipment(Net PPE) was $842 Mil.
Depreciation, Depletion and Amortization(DDA) was $308 Mil.
Selling, General & Admin. Expense(SGA) was $3,216 Mil.
Total Current Liabilities was $2,511 Mil.
Long-Term Debt was $1,477 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)
=(1055 / 13930) / (1172 / 15219)
=0.07573582 / 0.077009
=0.9835

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)
=(3629 / 15219) / (3353 / 13930)
=0.23845194 / 0.24070352
=0.9906

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 - (3845 + 750) / 6173) / (1 - (3878 + 842) / 6360)
=0.25562935 / 0.25786164
=0.9913

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
=13930 / 15219
=0.9153

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))
=(308 / (308 + 842)) / (243 / (243 + 750))
=0.26782609 / 0.24471299
=1.0944

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)
=(2921 / 13930) / (3216 / 15219)
=0.20969131 / 0.2113148
=0.9923

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)
=((1425 + 2289) / 6173) / ((1477 + 2511) / 6360)
=0.60165236 / 0.62704403
=0.9595

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
=(277 - -1 - 409) / 6173
=-0.0212

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 -2.65 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

Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15
DSRI 1.14290.98720.88981.06570.89740.90641.00091.57740.66231.0251
GMI 0.99351.06761.04940.98930.96790.96771.25781.0150.99570.9703
AQI 1.25071.04370.41530.74381.01261.22961.10372.07551.03851.0073
SGI 1.05131.03440.93350.83780.95790.98770.93091.0511.43180.8999
DEPI 1.03641.08841.07250.940.97810.92270.86271.39230.56130.9257
SGAI 0.92870.9861.08161.06590.96121.0240.77520.99820.97130.9495
LVGI 1.0840.91391.2751.00461.03990.96480.99510.94891.08731.0005
TATA -0.0531-0.0061-0.3741-0.1861-0.0618-0.0317-0.0696-0.0413-0.0755-0.0185
M-score -2.46-2.40-4.70-3.56-2.92-2.65-2.66-1.59-2.82-2.65

Office Depot Inc Quarterly Data

Mar14Jun14Sep14Dec14Mar15Jun15Sep15Dec15Mar16Jun16
DSRI 1.40711.27861.080.66220.75470.84320.99881.02511.01640.9835
GMI 1.02521.02061.01070.99580.97770.97310.9670.97050.97970.9906
AQI 1.92011.97025.60111.03851.05221.05961.00861.00731.04050.9913
SGI 1.22171.3681.51751.43191.21291.06430.94220.89990.9060.9153
DEPI 1.16050.99650.87070.56130.65460.73420.84730.92570.99861.0944
SGAI 0.97831.01010.99470.9750.98290.92980.94670.94930.96260.9923
LVGI 0.97110.98241.0051.08731.05311.00381.01141.00050.98560.9595
TATA -0.0598-0.0664-0.0646-0.0756-0.0588-0.0401-0.0331-0.0185-0.004-0.0212
M-score -1.77-1.80-0.40-2.82-2.84-2.76-2.71-2.65-2.55-2.65
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