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Office Depot Inc (NAS:ODP)
Beneish M-Score
-2.95 (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 -2.95 suggests that the company is not a manipulator.

ODP' s Beneish M-Score Range Over the Past 10 Years
Min: -5.36   Max: -0.34
Current: -2.95

-5.36
-0.34

During the past 13 years, the highest Beneish M-Score of Office Depot Inc was -0.34. 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 * 0.662+0.528 * 1.0031+0.404 * 1.2761+0.892 * 0.8811+0.115 * 1.0647
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0359+4.679 * -0.0415-0.327 * 0.9292
=-2.95

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

This Year (Sep16) TTM:Last Year (Sep15) TTM:
Accounts Receivable was $718 Mil.
Revenue was 2836 + 3218 + 3544 + 3478 = $13,076 Mil.
Gross Profit was 726 + 747 + 856 + 814 = $3,143 Mil.
Total Current Assets was $3,400 Mil.
Total Assets was $5,881 Mil.
Property, Plant and Equipment(Net PPE) was $601 Mil.
Depreciation, Depletion and Amortization(DDA) was $203 Mil.
Selling, General & Admin. Expense(SGA) was $2,732 Mil.
Total Current Liabilities was $2,322 Mil.
Long-Term Debt was $1,163 Mil.
Net Income was 44 + 210 + 46 + 15 = $315 Mil.
Non Operating Income was -14 + 0 + 0 + 0 = $-14 Mil.
Cash Flow from Operations was 299 + 287 + -139 + 126 = $573 Mil.
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 $2,993 Mil.
Total Current Liabilities was $2,652 Mil.
Long-Term Debt was $1,467 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)
=(718 / 13076) / (1231 / 14840)
=0.05490976 / 0.08295148
=0.662

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)
=(3578 / 14840) / (3143 / 13076)
=0.24110512 / 0.24036403
=1.0031

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 - (3400 + 601) / 5881) / (1 - (4025 + 816) / 6459)
=0.31967352 / 0.25050317
=1.2761

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
=13076 / 14840
=0.8811

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))
=(300 / (300 + 816)) / (203 / (203 + 601))
=0.2688172 / 0.25248756
=1.0647

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)
=(2732 / 13076) / (2993 / 14840)
=0.2089324 / 0.20168464
=1.0359

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)
=((1163 + 2322) / 5881) / ((1467 + 2652) / 6459)
=0.59258629 / 0.63771482
=0.9292

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
=(315 - -14 - 573) / 5881
=-0.0415

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 -2.95 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 local exchange's currency.

Office Depot Inc Annual Data

Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15
DSRI 1.14290.98720.88981.06570.89740.90651.00091.57740.66231.0251
GMI 0.99351.06761.04940.98930.96791.22570.9931.0150.99570.9703
AQI 1.25071.04370.41530.74381.01261.22961.10372.07551.03851.0073
SGI 1.05131.03440.93350.83780.95790.98760.9311.0511.43180.8999
DEPI 1.03641.08841.07250.940.97810.92420.86131.39230.56130.9257
SGAI 0.92870.9861.08161.06590.96120.78871.00650.99820.97130.9495
LVGI 1.0840.91391.2751.00461.03990.96480.99510.94891.08731.0005
TATA -0.0531-0.0061-0.3741-0.1861-0.0618-0.0318-0.0696-0.0413-0.0755-0.0185
M-score -2.46-2.40-4.70-3.56-2.92-2.47-2.84-1.59-2.82-2.65

Office Depot Inc Quarterly Data

Jun14Sep14Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16
DSRI 1.27851.080.66220.75470.84320.99881.02511.01640.98350.662
GMI 1.16451.08360.99580.97790.97310.96710.97050.97970.99061.0031
AQI 1.97025.60111.02531.05221.05961.00861.02021.04050.99131.2761
SGI 1.36811.51741.43191.21291.06430.94220.89990.9060.91530.8811
DEPI 0.99660.86860.56130.65560.73440.84830.92570.99861.09441.0647
SGAI 0.85610.90560.93870.94660.89650.90080.98210.99731.03041.0359
LVGI 0.98241.0051.07521.05311.00381.01141.01180.98560.95950.9292
TATA -0.0667-0.0646-0.0747-0.0588-0.0401-0.0331-0.0185-0.004-0.0212-0.0415
M-score -1.70-0.34-2.81-2.83-2.76-2.71-2.65-2.56-2.66-2.95
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