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Office Depot Inc (NYSE:ODP)
Beneish M-Score
-1.76 (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 -1.76 signals that the company is a manipulator.

ODP' s 10-Year Beneish M-Score Range
Min: -5.36   Max: -1.58
Current: -1.76

-5.36
-1.58

During the past 13 years, the highest Beneish M-Score of Office Depot Inc was -1.58. 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 * 1.4072+0.528 * 1.0251+0.404 * 1.9201+0.892 * 1.2217+0.115 * 1.1605
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9805+4.679 * -0.0576-0.327 * 0.9711
=-1.76

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

This Year (Mar14) TTM:Last Year (Mar13) TTM:
Accounts Receivable was $1,312 Mil.
Revenue was 4354 + 3485.673 + 2619.448 + 2418.619 = $12,878 Mil.
Gross Profit was 1015 + 787.291 + 632.743 + 546.269 = $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 $2,873 Mil.
Total Current Liabilities was $2,721 Mil.
Long-Term Debt was $1,539 Mil.
Net Income was -109 + -120.039 + 160.9 + -54.206 = $-122 Mil.
Non Operating Income was 1 + 0.267 + 382.131 + -9.395 = $374 Mil.
Cash Flow from Operations was -74 + 12.797 + -25.561 + -0.236 = $-87 Mil.
Accounts Receivable was $763 Mil.
Revenue was 2718 + 2623.108 + 2692.933 + 2507.15 = $10,541 Mil.
Gross Profit was 660 + 606.729 + 662.672 + 572.196 = $2,502 Mil.
Total Current Assets was $2,497 Mil.
Total Assets was $3,792 Mil.
Property, Plant and Equipment(Net PPE) was $821 Mil.
Depreciation, Depletion and Amortization(DDA) was $201 Mil.
Selling, General & Admin. Expense(SGA) was $2,399 Mil.
Total Current Liabilities was $1,859 Mil.
Long-Term Debt was $480 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)
=(1312 / 12877.74) / (763.2 / 10541.191)
=0.10188123 / 0.07240169
=1.4072

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)
=(787.291 / 10541.191) / (1015 / 12877.74)
=0.23731635 / 0.23150825
=1.0251

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 - (4245 + 1161) / 7111) / (1 - (2497.11 + 821.053) / 3791.647)
=0.23976937 / 0.12487555
=1.9201

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
=12877.74 / 10541.191
=1.2217

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))
=(201.098 / (201.098 + 821.053)) / (237 / (237 + 1161))
=0.19674001 / 0.1695279
=1.1605

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)
=(2873.376 / 12877.74) / (2398.867 / 10541.191)
=0.22312735 / 0.22757077
=0.9805

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)
=((1539 + 2721) / 7111) / ((479.82 + 1859.328) / 3791.647)
=0.59907186 / 0.61692135
=0.9711

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
=(-122.345 - 374.003 - -87) / 7111
=-0.0576

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 -1.76 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 1.06790.89771.14290.98720.88981.06570.89740.90641.00091.5774
GMI 0.99921.02010.99351.06761.04940.98930.96790.96771.25781.015
AQI 0.95581.00861.25071.04370.41530.74381.01261.22961.10372.0755
SGI 1.09761.05271.05131.03440.93350.83780.95790.98770.93091.051
DEPI 1.05340.91571.03641.08841.07250.940.97810.92270.86271.3923
SGAI 0.99591.0310.92870.9861.08161.06590.96121.0240.77520.9982
LVGI 0.93941.05681.0840.91391.2751.00461.03990.96480.99510.9489
TATA -0.0416-0.0632-0.0553-0.0072-0.3741-0.1861-0.0618-0.0317-0.0696-0.0413
M-score -2.52-2.84-2.47-2.40-4.70-3.56-2.92-2.65-2.66-1.59

Office Depot Inc Quarterly Data

Dec11Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14
DSRI 0.90640.89280.87530.94391.00090.94470.98731.01831.57751.4072
GMI 0.96771.01151.07421.14751.25781.19971.14021.0871.01491.0251
AQI 1.22961.08911.13721.18291.10371.08381.02440.36552.07551.9201
SGI 0.98770.98750.9690.96170.93090.92550.93440.93991.0511.2217
DEPI 0.92270.89790.88870.85560.86270.87040.90330.96141.39231.1605
SGAI 1.02420.96570.91710.85890.7750.81270.84660.88990.99680.9805
LVGI 0.96480.96550.98671.0160.99511.00411.02160.98910.94890.9711
TATA -0.0291-0.0145-0.0275-0.0856-0.0696-0.0907-0.0976-0.0741-0.0391-0.0576
M-score -2.64-2.61-2.65-2.81-2.66-2.87-2.91-3.06-1.58-1.76
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