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Overstock.com Inc (NAS:OSTK)
Beneish M-Score
1.10 (As of Today)

Warning Sign:

Beneish M-Score 1.10 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.

Overstock.com Inc has a M-score of 1.09 signals that the company is a manipulator.

OSTK' s 10-Year Beneish M-Score Range
Min: -5.76   Max: 1.1
Current: 1.1

-5.76
1.1

During the past 13 years, the highest Beneish M-Score of Overstock.com Inc was 1.10. The lowest was -5.76. And the median was -3.22.


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 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 * 0.9389+0.528 * 0.9953+0.404 * 8.2954+0.892 * 1.1415+0.115 * 1.25
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.5816+4.679 * 0.1143-0.327 * 0.7048
=1.09

* 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 $16 Mil.
Revenue was 332.545 + 341.207 + 397.593 + 301.426 = $1,373 Mil.
Gross Profit was 62.625 + 63.996 + 71.735 + 59.15 = $258 Mil.
Total Current Assets was $171 Mil.
Total Assets was $277 Mil.
Property, Plant and Equipment(Net PPE) was $35 Mil.
Depreciation, Depletion and Amortization(DDA) was $15 Mil.
Selling, General & Admin. Expense(SGA) was $240 Mil.
Total Current Liabilities was $144 Mil.
Long-Term Debt was $0 Mil.
Net Income was 1.909 + 3.97 + 73.581 + 3.533 = $83 Mil.
Non Operating Income was 0.524 + 0.459 + -0.595 + 0.165 = $1 Mil.
Cash Flow from Operations was 0.38 + -29.679 + 69.861 + 10.263 = $51 Mil.
Accounts Receivable was $15 Mil.
Revenue was 293.204 + 311.994 + 342.034 + 255.352 = $1,203 Mil.
Gross Profit was 57.839 + 58.936 + 61.211 + 46.542 = $225 Mil.
Total Current Assets was $141 Mil.
Total Assets was $171 Mil.
Property, Plant and Equipment(Net PPE) was $26 Mil.
Depreciation, Depletion and Amortization(DDA) was $15 Mil.
Selling, General & Admin. Expense(SGA) was $133 Mil.
Total Current Liabilities was $126 Mil.
Long-Term Debt was $0 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)
=(15.628 / 1372.771) / (14.582 / 1202.584)
=0.01138427 / 0.01212556
=0.9389

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)
=(63.996 / 1202.584) / (62.625 / 1372.771)
=0.18670463 / 0.18758118
=0.9953

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 - (171.1 + 35.002) / 276.529) / (1 - (140.525 + 25.541) / 171.326)
=0.25468215 / 0.0307017
=8.2954

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
=1372.771 / 1202.584
=1.1415

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))
=(15.439 / (15.439 + 25.541)) / (15.101 / (15.101 + 35.002))
=0.37674475 / 0.30139912
=1.25

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)
=(240.092 / 1372.771) / (132.987 / 1202.584)
=0.17489589 / 0.11058437
=1.5816

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)
=((0 + 143.811) / 276.529) / ((0 + 126.421) / 171.326)
=0.52005757 / 0.73789734
=0.7048

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
=(82.993 - 0.553 - 50.825) / 276.529
=0.1143

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 1.09 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.

Overstock.com Inc Annual Data

Dec04Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13
DSRI 0.27111.25921.59940.78070.54331.34510.93721.02931.36910.7018
GMI 0.8010.88671.24690.71670.97980.91151.07991.02430.94110.9506
AQI 0.47745.64750.87940.38920.63530.84931.17471.46160.96838.4255
SGI 2.07011.62510.98050.96451.09761.05081.24310.96731.04271.1864
DEPI 1.15971.03660.56620.70371.05731.28671.11780.87680.90791.2414
SGAI 0.92191.25460.83220.8580.89771.03540.9011.14510.89351.6167
LVGI 1.33371.31471.06061.14971.15010.92790.84511.15710.89710.7419
TATA -0.0797-0.0722-0.2969-0.2352-0.0764-0.1924-0.0207-0.2527-0.09430.0159
M-score -2.96-0.35-3.29-4.27-3.35-3.07-2.22-3.56-2.550.47

Overstock.com Inc Quarterly Data

Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14
DSRI 1.57261.57441.68761.36911.21451.26950.89790.70180.86080.9389
GMI 1.05051.02190.98140.94110.91930.91280.92440.95060.96380.9953
AQI 1.45091.10341.10590.96831.05920.95412.1328.42557.37498.2954
SGI 0.96350.96430.98371.04271.0931.13911.16551.18641.16061.1415
DEPI 0.90250.90020.9340.90791.08781.08931.13991.24141.25561.25
SGAI 1.07431.03871.0250.89350.91320.94830.99781.61671.6271.5816
LVGI 1.07211.01931.07080.89710.87430.86350.85860.74190.71010.7048
TATA -0.2078-0.2054-0.1811-0.0943-0.1978-0.242-0.18520.01590.10440.1143
M-score -2.80-2.92-2.71-2.55-3.08-3.24-2.810.470.601.09
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