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Office Depot Inc (NAS:ODP)
Beneish M-Score
-0.40 (As of Today)

Warning Sign:

Beneish M-Score -0.40 higher than -2.22, which implies that it might have manipulated its financial results.

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 -0.40 signals that the company is a manipulator.

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

-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 -2.69.


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 * 1.08+0.528 * 1.0107+0.404 * 5.6011+0.892 * 1.5175+0.115 * 0.8707
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9995+4.679 * -0.0646-0.327 * 1.005
=-0.40

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

This Year (Sep14) TTM:Last Year (Sep13) TTM:
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 $3,525 Mil.
Total Current Liabilities was $2,751 Mil.
Long-Term Debt was $1,524 Mil.
Net Income was 29 + -190 + -109 + -120 = $-390 Mil.
Non Operating Income was 1 + -2 + 1 + 0 = $0 Mil.
Cash Flow from Operations was 197 + -88 + -74 + 13 = $48 Mil.
Accounts Receivable was $798 Mil.
Revenue was 2619 + 2419 + 2718 + 2623.108 = $10,379 Mil.
Gross Profit was 633 + 546 + 660 + 606.729 = $2,446 Mil.
Total Current Assets was $2,694 Mil.
Total Assets was $3,652 Mil.
Property, Plant and Equipment(Net PPE) was $796 Mil.
Depreciation, Depletion and Amortization(DDA) was $197 Mil.
Selling, General & Admin. Expense(SGA) was $2,324 Mil.
Total Current Liabilities was $1,820 Mil.
Long-Term Debt was $471 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)
=(1308 / 15750) / (798.147 / 10379.108)
=0.08304762 / 0.07689938
=1.08

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)
=(883 / 10379.108) / (987 / 15750)
=0.23563961 / 0.23314286
=1.0107

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 - (4089 + 1007) / 6780) / (1 - (2693.779 + 796.058) / 3651.772)
=0.24837758 / 0.04434423
=5.6011

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
=15750 / 10379.108
=1.5175

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))
=(196.926 / (196.926 + 796.058)) / (297 / (297 + 1007))
=0.19831739 / 0.22776074
=0.8707

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)
=(3525 / 15750) / (2324.111 / 10379.108)
=0.22380952 / 0.22392204
=0.9995

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)
=((1524 + 2751) / 6780) / ((471.259 + 1819.946) / 3651.772)
=0.63053097 / 0.6274228
=1.005

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
=(-390 - 0 - 48) / 6780
=-0.0646

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 -0.40 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

Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14
DSRI 0.87530.94391.00090.94470.98721.01831.57741.40711.27861.08
GMI 1.07421.14751.25781.19971.14031.0871.0151.02521.02061.0107
AQI 1.13721.18291.10371.08381.02440.36552.07551.92011.97025.6011
SGI 0.9690.96170.93090.92550.93440.93991.0511.22171.3681.5175
DEPI 0.88870.85560.86270.87040.9030.95951.39231.16050.99650.8707
SGAI 0.91710.85890.7750.81270.84280.8880.99430.97831.01010.9995
LVGI 0.98671.0160.99511.00411.02160.98910.94890.97110.98241.005
TATA -0.0275-0.0856-0.0696-0.0907-0.1022-0.0784-0.0412-0.0598-0.0664-0.0646
M-score -2.65-2.81-2.66-2.87-2.94-3.08-1.59-1.77-1.80-0.40
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