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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 -0.34 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 * 1.0836+0.404 * 5.6011+0.892 * 1.5174+0.115 * 0.8686
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9056+4.679 * -0.0646-0.327 * 1.005
=-0.34

* 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 + 3485.673 = $15,750 Mil.
Gross Profit was 987 + 883 + 1015 + 787.291 = $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 $3,526 Mil.
Total Current Liabilities was $2,751 Mil.
Long-Term Debt was $1,524 Mil.
Net Income was 29 + -190 + -109 + -120.039 = $-390 Mil.
Non Operating Income was 1 + -2 + 1 + 0.267 = $0 Mil.
Cash Flow from Operations was 197 + -88 + -74 + 12.797 = $48 Mil.
Accounts Receivable was $798 Mil.
Revenue was 2619.448 + 2418.619 + 2718.26 + 2622.76 = $10,379 Mil.
Gross Profit was 632.743 + 546.269 + 659.697 + 783.623 = $2,622 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 $2,566 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 / 15749.673) / (798.147 / 10379.087)
=0.08304934 / 0.07689954
=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 / 10379.087) / (987 / 15749.673)
=0.25265536 / 0.23316617
=1.0836

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
=15749.673 / 10379.087
=1.5174

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))
=(196.635 / (196.635 + 796.058)) / (297.48 / (297.48 + 1007))
=0.19808239 / 0.22804489
=0.8686

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)
=(3526.426 / 15749.673) / (2566.194 / 10379.087)
=0.22390471 / 0.2472466
=0.9056

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
=(-390.039 - 0.267 - 47.797) / 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 -0.34 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 1.06790.89771.14290.98720.88981.06570.89740.90641.00091.5775
GMI 0.99911.02010.98921.07231.04940.98930.96790.96770.98221.2999
AQI 0.95191.00461.24821.04570.41530.74381.01261.22961.10432.0743
SGI 1.09761.05271.05131.03440.93350.83780.95790.98770.93091.0511
DEPI 1.07070.91571.03641.08841.07250.940.97810.92270.86231.3929
SGAI 0.99731.0310.92870.9861.08161.06590.96121.02751.01580.7592
LVGI 0.9361.05281.08190.91571.2751.00461.03990.96480.99520.9487
TATA -0.0418-0.0632-0.0532-0.0072-0.3745-0.1861-0.0618-0.0317-0.0695-0.0413
M-score -2.52-2.84-2.47-2.40-4.70-3.56-2.92-2.65-2.85-1.40

Office Depot Inc Quarterly Data

Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14
DSRI 0.87530.94391.00090.94480.98731.01831.57751.40721.27851.08
GMI 0.95910.96510.98221.05021.11941.20541.29991.23921.16451.0836
AQI 1.13721.18291.10431.08381.02440.36552.07431.92011.97025.6011
SGI 0.9690.96170.93090.92550.93440.93991.05111.22171.36811.5174
DEPI 0.88870.85560.86230.87120.90260.96061.39291.15770.99660.8686
SGAI 1.01631.00880.99980.96510.89630.83360.77130.78880.85610.9056
LVGI 0.98671.0160.99521.00411.02160.98910.94870.97110.98241.005
TATA -0.0303-0.0856-0.0695-0.0906-0.0975-0.0739-0.0391-0.0576-0.0667-0.0646
M-score -2.74-2.93-2.85-2.97-2.93-2.98-1.39-1.62-1.70-0.34
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