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

Warning Sign:

Beneish M-Score 0.69 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 0.69 signals that the company is a manipulator.

OSTK' s 10-Year Beneish M-Score Range
Min: -5.9   Max: 0.69
Current: 0.69

-5.9
0.69

During the past 13 years, the highest Beneish M-Score of Overstock.com Inc was 0.69. The lowest was -5.90. And the median was -3.19.


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 * 0.8608+0.528 * 0.9638+0.404 * 7.3749+0.892 * 1.1606+0.115 * 1.2556
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0684+4.679 * 0.1044-0.327 * 0.7101
=0.69

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

This Year (Mar14) TTM:Last Year (Mar13) TTM:
Accounts Receivable was $16 Mil.
Revenue was 341.207 + 397.593 + 301.426 + 293.204 = $1,333 Mil.
Gross Profit was 63.996 + 71.735 + 59.15 + 57.839 = $253 Mil.
Total Current Assets was $176 Mil.
Total Assets was $281 Mil.
Property, Plant and Equipment(Net PPE) was $33 Mil.
Depreciation, Depletion and Amortization(DDA) was $14 Mil.
Selling, General & Admin. Expense(SGA) was $236 Mil.
Total Current Liabilities was $151 Mil.
Long-Term Debt was $0 Mil.
Net Income was 3.97 + 73.581 + 3.533 + 3.698 = $85 Mil.
Non Operating Income was 0.459 + -0.595 + 0.165 + -0.15 = $-0 Mil.
Cash Flow from Operations was -29.679 + 69.861 + 10.263 + 5.174 = $56 Mil.
Accounts Receivable was $16 Mil.
Revenue was 311.994 + 342.034 + 255.352 + 239.536 = $1,149 Mil.
Gross Profit was 58.936 + 61.211 + 46.542 + 43.169 = $210 Mil.
Total Current Assets was $134 Mil.
Total Assets was $165 Mil.
Property, Plant and Equipment(Net PPE) was $26 Mil.
Depreciation, Depletion and Amortization(DDA) was $16 Mil.
Selling, General & Admin. Expense(SGA) was $191 Mil.
Total Current Liabilities was $125 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)
=(15.836 / 1333.43) / (15.851 / 1148.916)
=0.01187614 / 0.01379648
=0.8608

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)
=(71.735 / 1148.916) / (63.996 / 1333.43)
=0.18265739 / 0.18952626
=0.9638

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 - (176.39 + 33.417) / 280.578) / (1 - (133.638 + 25.937) / 165.226)
=0.25223289 / 0.03420164
=7.3749

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
=1333.43 / 1148.916
=1.1606

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))
=(15.838 / (15.838 + 25.937)) / (14.454 / (14.454 + 33.417))
=0.37912627 / 0.30193645
=1.2556

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)
=(236.461 / 1333.43) / (190.689 / 1148.916)
=0.17733289 / 0.16597297
=1.0684

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 + 150.916) / 280.578) / ((0 + 125.155) / 165.226)
=0.53787539 / 0.75747764
=0.7101

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
=(84.782 - -0.121 - 55.619) / 280.578
=0.1044

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 0.69 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 0.27111.08511.85610.71880.60161.31940.93721.02931.36910.7018
GMI 0.8060.91581.21560.71670.96550.9251.07991.02430.94110.9506
AQI 0.47585.87550.84820.39160.60120.89211.17471.46160.96838.4255
SGI 2.07011.6160.9860.96451.09171.05651.24310.96731.04271.1864
DEPI 1.15971.10870.52940.70371.08631.25231.11780.87680.90791.2414
SGAI 0.92190.96361.08350.8580.91211.01910.9011.14511.37811.0483
LVGI 1.32921.31921.06061.19781.08140.66751.19931.15710.89710.7419
TATA -0.0782-0.0727-0.2969-0.2366-0.0884-0.1924-0.0207-0.2527-0.09430.0159
M-score -2.95-0.35-3.13-4.35-3.36-2.98-2.34-3.56-2.630.56

Overstock.com Inc Quarterly Data

Dec11Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14
DSRI 1.02931.57261.57441.68761.36911.21451.26950.89790.70180.8608
GMI 1.02431.05051.02190.98140.94110.91930.91280.92440.95060.9638
AQI 1.46161.45091.10341.10590.96831.05920.95412.1328.42557.3749
SGI 0.96730.96350.96430.98371.04271.0931.13911.16551.18641.1606
DEPI 0.87680.90250.90020.9340.90791.08781.08931.13991.24141.2556
SGAI 1.14511.07431.03871.0251.37811.39061.41511.45561.04831.0684
LVGI 1.15711.07211.01931.07080.89710.87430.86350.85860.74190.7101
TATA -0.2527-0.2078-0.2054-0.1811-0.0943-0.1978-0.242-0.18520.01590.1044
M-score -3.56-2.80-2.92-2.71-2.63-3.16-3.32-2.890.560.69
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