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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.
Staples, Inc. has a M-score of -2.59 suggests that the company is not a manipulator.
During the past 13 years, the highest Beneish M-Score of Staples, Inc. was -1.74. The lowest was -3.27. And the median was -2.60.
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 Staples, 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 * 1.0682||+||0.528 * 1.0202||+||0.404 * 1.0851||+||0.892 * 0.9481||+||0.115 * 1.0107|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0226||+||4.679 * -0.0437||-||0.327 * 0.8856|
|This Year (Jan14) TTM:||Last Year (Jan13) TTM:|
|Accounts Receivable was $1,839 Mil.|
Revenue was 5873.273 + 6111.695 + 5314.724 + 5814.571 = $23,114 Mil.
Gross Profit was 1507.053 + 1654.726 + 1359.496 + 1511.01 = $6,032 Mil.
Total Current Assets was $5,240 Mil.
Total Assets was $11,175 Mil.
Property, Plant and Equipment(Net PPE) was $1,871 Mil.
Depreciation, Depletion and Amortization(DDA) was $458 Mil.
Selling, General & Admin. Expense(SGA) was $4,735 Mil.
Total Current Liabilities was $3,368 Mil.
Long-Term Debt was $1,000 Mil.
Net Income was 212.383 + 135.228 + 102.531 + 169.927 = $620 Mil.
Non Operating Income was 3.734 + 3.975 + -4.434 + -3.375 = $-0 Mil.
Cash Flow from Operations was 233.147 + 527.574 + -0.004 + 347.569 = $1,108 Mil.
|Accounts Receivable was $1,816 Mil.
Revenue was 6567.98 + 6353.14 + 5433.969 + 6025.421 = $24,381 Mil.
Gross Profit was 1719.409 + 1751.854 + 1419.415 + 1600.583 = $6,491 Mil.
Total Current Assets was $6,200 Mil.
Total Assets was $12,280 Mil.
Property, Plant and Equipment(Net PPE) was $1,963 Mil.
Depreciation, Depletion and Amortization(DDA) was $487 Mil.
Selling, General & Admin. Expense(SGA) was $4,884 Mil.
Total Current Liabilities was $4,419 Mil.
Long-Term Debt was $1,002 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)|
|=||(1838.714 / 23114.263)||/||(1815.586 / 24380.51)|
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)|
|=||(1654.726 / 24380.51)||/||(1507.053 / 23114.263)|
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 - (5239.558 + 1870.719) / 11174.876)||/||(1 - (6200.437 + 1963.175) / 12280.005)|
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))|
|=||(487.313 / (487.313 + 1963.175))||/||(458.218 / (458.218 + 1870.719))|
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)|
|=||(4735.294 / 23114.263)||/||(4884.284 / 24380.51)|
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)|
|=||((1000.205 + 3368.45) / 11174.876)||/||((1001.943 + 4418.625) / 12280.005)|
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|
|=||(620.069 - -0.1||-||1108.286)||/||11174.876|
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.
Staples, Inc. has a M-score of -2.59 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
Staples, Inc. Annual Data
Staples, Inc. Quarterly Data