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Office Depot Inc (NAS:ODP)
Beneish M-Score
-2.83 (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 -2.83 suggests that the company is not a manipulator.

ODP' s 10-Year Beneish M-Score Range
Min: -5.36   Max: -0.4
Current: -2.83

-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 * 0.7547+0.528 * 0.9777+0.404 * 1.0522+0.892 * 1.2129+0.115 * 0.6546
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9487+4.679 * -0.0588-0.327 * 1.0531
=-2.83

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

This Year (Mar15) TTM:Last Year (Mar14) TTM:
Accounts Receivable was $1,201 Mil.
Revenue was 3877 + 3833 + 4069 + 3841 = $15,620 Mil.
Gross Profit was 937 + 891 + 987 + 883 = $3,698 Mil.
Total Current Assets was $4,009 Mil.
Total Assets was $6,548 Mil.
Property, Plant and Equipment(Net PPE) was $887 Mil.
Depreciation, Depletion and Amortization(DDA) was $310 Mil.
Selling, General & Admin. Expense(SGA) was $3,299 Mil.
Total Current Liabilities was $2,639 Mil.
Long-Term Debt was $1,492 Mil.
Net Income was 45 + -84 + 29 + -190 = $-200 Mil.
Non Operating Income was 1 + 1 + 1 + -2 = $1 Mil.
Cash Flow from Operations was -46 + 121 + 197 + -88 = $184 Mil.
Accounts Receivable was $1,312 Mil.
Revenue was 4354 + 3486 + 2619 + 2419 = $12,878 Mil.
Gross Profit was 1015 + 787 + 633 + 546 = $2,981 Mil.
Total Current Assets was $4,245 Mil.
Total Assets was $7,111 Mil.
Property, Plant and Equipment(Net PPE) was $1,161 Mil.
Depreciation, Depletion and Amortization(DDA) was $237 Mil.
Selling, General & Admin. Expense(SGA) was $2,867 Mil.
Total Current Liabilities was $2,721 Mil.
Long-Term Debt was $1,539 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)
=(1201 / 15620) / (1312 / 12878)
=0.0768886 / 0.10187917
=0.7547

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)
=(891 / 12878) / (937 / 15620)
=0.23148004 / 0.23674776
=0.9777

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 - (4009 + 887) / 6548) / (1 - (4245 + 1161) / 7111)
=0.25229078 / 0.23976937
=1.0522

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
=15620 / 12878
=1.2129

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))
=(237 / (237 + 1161)) / (310 / (310 + 887))
=0.1695279 / 0.25898079
=0.6546

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)
=(3299 / 15620) / (2867 / 12878)
=0.21120359 / 0.22262774
=0.9487

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)
=((1492 + 2639) / 6548) / ((1539 + 2721) / 7111)
=0.63087966 / 0.59907186
=1.0531

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
=(-200 - 1 - 184) / 6548
=-0.0588

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 -2.83 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 0.89771.14290.98720.88981.06570.89740.90641.00091.57740.6623
GMI 1.02010.99351.06761.04940.98930.96790.96771.25781.0150.9957
AQI 1.00861.25071.04370.41530.74381.01261.22961.10372.07551.0253
SGI 1.05271.05131.03440.93350.83780.95790.98770.93091.0511.4318
DEPI 0.91571.03641.08841.07250.940.97810.92270.86271.39230.5613
SGAI 1.0310.92870.9861.08161.06590.96121.0240.77520.99820.9713
LVGI 1.05681.0840.91391.2751.00461.03990.96480.99510.94891.0752
TATA -0.0632-0.0553-0.0072-0.3741-0.1861-0.0618-0.0317-0.0696-0.0413-0.0745
M-score -2.84-2.47-2.40-4.70-3.56-2.92-2.65-2.66-1.59-2.82

Office Depot Inc Quarterly Data

Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14Dec14Mar15
DSRI 1.00090.94470.98721.01831.57741.40711.27861.080.66220.7547
GMI 1.25781.19971.14031.0871.0151.02521.02061.01070.99580.9777
AQI 1.10371.08381.02440.36552.07551.92011.97025.60111.02531.0522
SGI 0.93090.92550.93440.93991.0511.22171.3681.51751.43191.2129
DEPI 0.86270.87040.9030.95951.39231.16050.99650.87070.56130.6546
SGAI 0.7750.81270.84280.8880.99430.97831.01010.99950.94240.9487
LVGI 0.99511.00411.02160.98910.94890.97110.98241.0051.07521.0531
TATA -0.0696-0.0907-0.1022-0.0784-0.0412-0.0598-0.0664-0.0646-0.0747-0.0588
M-score -2.66-2.87-2.94-3.08-1.59-1.77-1.80-0.40-2.81-2.83
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