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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.
During the past 13 years, the highest Beneish M-Score of Overstock.com Inc was 1.10. The lowest was -6.10. And the median was -3.09.
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 Overstock.com 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 * 1.1664||+||0.528 * 1.0323||+||0.404 * 0.7125||+||0.892 * 1.0644||+||0.115 * 1.2522|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0295||+||4.679 * -0.1802||-||0.327 * 1.1348|
|This Year (Sep16) TTM:||Last Year (Sep15) TTM:|
|Accounts Receivable was $21 Mil.|
Revenue was 441.564 + 418.54 + 413.677 + 480.27 = $1,754 Mil.
Gross Profit was 79.716 + 76.322 + 77.307 + 83.109 = $316 Mil.
Total Current Assets was $195 Mil.
Total Assets was $424 Mil.
Property, Plant and Equipment(Net PPE) was $137 Mil.
Depreciation, Depletion and Amortization(DDA) was $30 Mil.
Selling, General & Admin. Expense(SGA) was $227 Mil.
Total Current Liabilities was $208 Mil.
Long-Term Debt was $48 Mil.
Net Income was -3.098 + -0.904 + 13.429 + 0.11 = $10 Mil.
Non Operating Income was 1.251 + 3.992 + 4.156 + 1.102 = $11 Mil.
Cash Flow from Operations was 11.543 + 7.521 + -34.503 + 90.916 = $75 Mil.
|Accounts Receivable was $17 Mil.
Revenue was 391.211 + 388.013 + 398.344 + 470.36 = $1,648 Mil.
Gross Profit was 72.451 + 73.657 + 75.437 + 85.38 = $307 Mil.
Total Current Assets was $152 Mil.
Total Assets was $332 Mil.
Property, Plant and Equipment(Net PPE) was $79 Mil.
Depreciation, Depletion and Amortization(DDA) was $23 Mil.
Selling, General & Admin. Expense(SGA) was $207 Mil.
Total Current Liabilities was $176 Mil.
Long-Term Debt was $0 Mil.
1. DSRI = Days Sales in Receivables Index
A large increase in DSR could be indicative of revenue inflation.
|DSRI||=||(Receivables_t / Revenue_t)||/||(Receivables_t-1 / Revenue_t-1)|
|=||(21.045 / 1754.051)||/||(16.951 / 1647.928)|
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.
|=||(GrossProfit_t-1 / Revenue_t-1)||/||(GrossProfit_t / Revenue_t)|
|=||(306.925 / 1647.928)||/||(316.454 / 1754.051)|
3. AQI = Asset Quality Index
AQI is the ratio of asset quality in year t to year t-1.
|AQI||=||(1 - (CurrentAssets_t + PPE_t) / TotalAssets_t)||/||(1 - (CurrentAssets_t-1 + PPE_t-1) / TotalAssets_t-1)|
|=||(1 - (195.415 + 136.594) / 424.276)||/||(1 - (151.727 + 78.807) / 331.806)|
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.
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))|
|=||(23.085 / (23.085 + 78.807))||/||(30.173 / (30.173 + 136.594))|
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)|
|=||(227.254 / 1754.051)||/||(207.385 / 1647.928)|
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)|
|=||((47.576 + 207.944) / 424.276)||/||((0 + 176.089) / 331.806)|
8. TATA = Total Accruals to Total Assets
Total accruals calculated as the change in working capital accounts other than cash less depreciation.
|=||(NetIncome_t - NonOperatingIncome_t||-||CashFlowsfromOperations_t)||/||TotalAssets_t|
|=||(9.537 - 10.501||-||75.477)||/||424.276|
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.
Overstock.com Inc has a M-score of -3.23 suggests that the company will not be a manipulator.
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
Overstock.com Inc Annual Data
Overstock.com Inc Quarterly Data