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Office Depot Inc (NYSE:ODP)
Beneish M-Score
-1.75 (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 -1.75 signals that the company is a manipulator.

ODP' s 10-Year Beneish M-Score Range
Min: -5.36   Max: -1.57
Current: -1.75

-5.36
-1.57

During the past 13 years, the highest Beneish M-Score of Office Depot Inc was -1.57. The lowest was -5.36. And the median was -2.70.


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 * 1.2786+0.528 * 1.0207+0.404 * 1.9702+0.892 * 1.3681+0.115 * 0.716
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0146+4.679 * -0.0495-0.327 * 0.9824
=-1.75

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

This Year (Jun14) TTM:Last Year (Jun13) TTM:
Accounts Receivable was $1,306 Mil.
Revenue was 3841 + 4354 + 3486 + 2619.448 = $14,300 Mil.
Gross Profit was 883 + 1015 + 787 + 632.743 = $3,318 Mil.
Total Current Assets was $4,181 Mil.
Total Assets was $6,973 Mil.
Property, Plant and Equipment(Net PPE) was $1,095 Mil.
Depreciation, Depletion and Amortization(DDA) was $413 Mil.
Selling, General & Admin. Expense(SGA) was $3,265 Mil.
Total Current Liabilities was $2,822 Mil.
Long-Term Debt was $1,534 Mil.
Net Income was -190 + -109 + -120 + 160.9 = $-258 Mil.
Non Operating Income was -2 + 1 + 1 + 382.131 = $382 Mil.
Cash Flow from Operations was -88 + -74 + -107 + -25.797 = $-295 Mil.
Accounts Receivable was $747 Mil.
Revenue was 2419 + 2718 + 2623.108 + 2692.933 = $10,453 Mil.
Gross Profit was 546 + 660 + 606.729 + 662.672 = $2,475 Mil.
Total Current Assets was $2,475 Mil.
Total Assets was $3,748 Mil.
Property, Plant and Equipment(Net PPE) was $810 Mil.
Depreciation, Depletion and Amortization(DDA) was $197 Mil.
Selling, General & Admin. Expense(SGA) was $2,352 Mil.
Total Current Liabilities was $1,908 Mil.
Long-Term Debt was $475 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)
=(1306 / 14300.448) / (746.645 / 10453.041)
=0.09132581 / 0.0714285
=1.2786

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)
=(1015 / 10453.041) / (883 / 14300.448)
=0.23681157 / 0.23200273
=1.0207

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 - (4181 + 1095) / 6973) / (1 - (2474.684 + 809.965) / 3747.565)
=0.24336727 / 0.12352448
=1.9702

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
=14300.448 / 10453.041
=1.3681

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))
=(197.378 / (197.378 + 809.965)) / (412.52 / (412.52 + 1095))
=0.19593922 / 0.27364148
=0.716

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)
=(3264.607 / 14300.448) / (2351.885 / 10453.041)
=0.22828704 / 0.22499529
=1.0146

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)
=((1534 + 2822) / 6973) / ((475.004 + 1908.074) / 3747.565)
=0.62469525 / 0.63590038
=0.9824

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
=(-258.1 - 382.131 - -294.797) / 6973
=-0.0495

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 -1.75 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

Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14
DSRI 0.89280.87530.94391.00090.94470.98721.01831.57741.40711.2786
GMI 1.01151.07421.14751.25781.19971.14031.08721.01521.02531.0207
AQI 1.08911.13721.18291.10371.08381.02440.36552.07551.92011.9702
SGI 0.98750.9690.96170.93090.92550.93440.941.05111.22171.3681
DEPI 0.89790.88870.85560.86270.87040.9030.96140.90150.79540.716
SGAI 0.96570.91710.85890.7750.81270.84280.885910.98321.0146
LVGI 0.96550.98671.0160.99511.00411.02160.98910.94890.97110.9824
TATA -0.0145-0.0275-0.0856-0.0696-0.0907-0.1022-0.0788-0.0255-0.0432-0.0495
M-score -2.61-2.65-2.81-2.66-2.87-2.94-3.08-1.57-1.74-1.75
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