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Office Depot Inc (NAS:ODP)
Beneish M-Score
-2.71 (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 -2.71 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: -2.71

-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 -2.72.


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 * 0.9988+0.528 * 0.967+0.404 * 1.0086+0.892 * 0.9422+0.115 * 0.8473
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9467+4.679 * -0.0331-0.327 * 1.0114
=-2.71

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

This Year (Sep15) TTM:Last Year (Sep14) TTM:
Accounts Receivable was $1,231 Mil.
Revenue was 3690 + 3440 + 3877 + 3833 = $14,840 Mil.
Gross Profit was 936 + 814 + 937 + 891 = $3,578 Mil.
Total Current Assets was $4,025 Mil.
Total Assets was $6,459 Mil.
Property, Plant and Equipment(Net PPE) was $816 Mil.
Depreciation, Depletion and Amortization(DDA) was $300 Mil.
Selling, General & Admin. Expense(SGA) was $3,129 Mil.
Total Current Liabilities was $2,652 Mil.
Long-Term Debt was $1,467 Mil.
Net Income was 6 + -58 + 45 + -84 = $-91 Mil.
Non Operating Income was -1 + 1 + 1 + 1 = $2 Mil.
Cash Flow from Operations was 135 + -89 + -46 + 121 = $121 Mil.
Accounts Receivable was $1,308 Mil.
Revenue was 4069 + 3841 + 4354 + 3486 = $15,750 Mil.
Gross Profit was 987 + 883 + 1015 + 787 = $3,672 Mil.
Total Current Assets was $4,089 Mil.
Total Assets was $6,780 Mil.
Property, Plant and Equipment(Net PPE) was $1,007 Mil.
Depreciation, Depletion and Amortization(DDA) was $297 Mil.
Selling, General & Admin. Expense(SGA) was $3,508 Mil.
Total Current Liabilities was $2,751 Mil.
Long-Term Debt was $1,524 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)
=(1231 / 14840) / (1308 / 15750)
=0.08295148 / 0.08304762
=0.9988

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)
=(814 / 15750) / (936 / 14840)
=0.23314286 / 0.24110512
=0.967

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 - (4025 + 816) / 6459) / (1 - (4089 + 1007) / 6780)
=0.25050317 / 0.24837758
=1.0086

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
=14840 / 15750
=0.9422

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))
=(297 / (297 + 1007)) / (300 / (300 + 816))
=0.22776074 / 0.2688172
=0.8473

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)
=(3129 / 14840) / (3508 / 15750)
=0.21084906 / 0.22273016
=0.9467

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)
=((1467 + 2652) / 6459) / ((1524 + 2751) / 6780)
=0.63771482 / 0.63053097
=1.0114

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
=(-91 - 2 - 121) / 6459
=-0.0331

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 -2.71 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

Jun13Sep13Dec13Mar14Jun14Sep14Dec14Mar15Jun15Sep15
DSRI 0.98721.01831.57741.40711.27861.080.66220.75470.84320.9988
GMI 1.14031.0871.0151.02521.02061.01070.99580.97770.97310.967
AQI 1.02440.36552.07551.92011.97025.60111.02531.05221.05961.0086
SGI 0.93440.93991.0511.22171.3681.51751.43191.21291.06430.9422
DEPI 0.9030.95951.39231.16050.99650.87070.56130.65460.73420.8473
SGAI 0.84280.8880.99430.97831.01010.99470.9750.98290.92980.9467
LVGI 1.02160.98910.94890.97110.98241.0051.07521.05311.00381.0114
TATA -0.1022-0.0784-0.0412-0.0598-0.0664-0.0646-0.0747-0.0588-0.0401-0.0331
M-score -2.94-3.08-1.59-1.77-1.80-0.40-2.82-2.84-2.76-2.71
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