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Staples Inc (NAS:SPLS)
Beneish M-Score
-2.56 (As of Today)

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 -2.56 suggests that the company is not a manipulator.

SPLS' s 10-Year Beneish M-Score Range
Min: -3.27   Max: -0.94
Current: -2.56

-3.27
-0.94

During the past 13 years, the highest Beneish M-Score of Staples Inc was -0.94. The lowest was -3.27. And the median was -2.58.


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 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 * 1.1401+0.528 * 1.0251+0.404 * 1.0705+0.892 * 0.9505+0.115 * 1.015
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0409+4.679 * -0.0489-0.327 * 0.9125
=-2.56

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

This Year (Jul14) TTM:Last Year (Jul13) TTM:
Accounts Receivable was $1,842 Mil.
Revenue was 5220.103 + 5654.259 + 5873.273 + 6111.695 = $22,859 Mil.
Gross Profit was 1308.043 + 1410.294 + 1507.053 + 1654.726 = $5,880 Mil.
Total Current Assets was $5,432 Mil.
Total Assets was $11,278 Mil.
Property, Plant and Equipment(Net PPE) was $1,776 Mil.
Depreciation, Depletion and Amortization(DDA) was $459 Mil.
Selling, General & Admin. Expense(SGA) was $4,768 Mil.
Total Current Liabilities was $3,519 Mil.
Long-Term Debt was $1,016 Mil.
Net Income was 81.875 + 96.21 + 212.383 + 135.228 = $526 Mil.
Non Operating Income was 4.504 + 0.947 + 3.734 + 3.975 = $13 Mil.
Cash Flow from Operations was -56.273 + 359.851 + 233.147 + 527.574 = $1,064 Mil.
Accounts Receivable was $1,700 Mil.
Revenue was 5314.724 + 5814.571 + 6567.98 + 6353.14 = $24,050 Mil.
Gross Profit was 1359.496 + 1511.01 + 1719.409 + 1751.854 = $6,342 Mil.
Total Current Assets was $6,114 Mil.
Total Assets was $12,000 Mil.
Property, Plant and Equipment(Net PPE) was $1,840 Mil.
Depreciation, Depletion and Amortization(DDA) was $484 Mil.
Selling, General & Admin. Expense(SGA) was $4,819 Mil.
Total Current Liabilities was $4,287 Mil.
Long-Term Debt was $1,000 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)
=(1841.614 / 22859.33) / (1699.51 / 24050.415)
=0.0805629 / 0.07066448
=1.1401

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)
=(1410.294 / 24050.415) / (1308.043 / 22859.33)
=0.26368647 / 0.25723046
=1.0251

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 - (5431.874 + 1776.144) / 11278.024) / (1 - (6114.235 + 1840.184) / 11999.64)
=0.36087935 / 0.33711186
=1.0705

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
=22859.33 / 24050.415
=0.9505

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))
=(484.482 / (484.482 + 1840.184)) / (458.936 / (458.936 + 1776.144))
=0.20840929 / 0.20533314
=1.015

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)
=(4767.728 / 22859.33) / (4818.837 / 24050.415)
=0.20856814 / 0.20036399
=1.0409

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)
=((1015.699 + 3519.048) / 11278.024) / ((1000.336 + 4287.406) / 11999.64)
=0.40208701 / 0.44065839
=0.9125

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
=(525.696 - 13.16 - 1064.299) / 11278.024
=-0.0489

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 -2.56 suggests that the company will not 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.

Staples Inc Annual Data

Jan05Jan06Jan07Jan08Jan09Jan10Jan11Jan12Jan13Jan14
DSRI 1.06111.06821.10661.06941.87930.93551.08511.01840.90321.0682
GMI 0.95010.99620.99650.99821.05881.01480.98490.99831.01871.0202
AQI 1.02260.99071.00241.08231.48541.02810.97090.98960.88981.0851
SGI 1.11421.11281.12951.06671.19161.05160.99421.02190.98850.9481
DEPI 1.06621.00671.00470.96170.78890.95071.07871.00190.9461.0107
SGAI 1.01240.9870.98651.00560.97491.00760.99051.01070.991.0226
LVGI 0.94150.99840.95070.88351.59560.87870.990.93161.0450.8856
TATA -0.0667-0.0534-0.0225-0.0402-0.0668-0.0984-0.0399-0.0438-0.1093-0.0437
M-score -2.63-2.57-2.35-2.48-1.80-2.90-2.60-2.63-3.14-2.59

Staples Inc Quarterly Data

Apr12Jul12Oct12Jan13Apr13Jul13Oct13Jan14Apr14Jul14
DSRI 0.96980.95270.90130.90990.91240.92581.01761.06821.11631.1401
GMI 0.9991.00161.01191.01531.02121.02311.02321.02021.0251.0251
AQI 0.9580.96170.89640.88980.8690.89380.9861.08511.08051.0705
SGI 1.01860.9910.98810.98120.97850.98910.98440.94810.94970.9505
DEPI 0.98170.9830.93930.9460.9280.92180.991.01071.01541.015
SGAI 1.00841.00420.99710.99020.98590.98480.99181.02261.03291.0409
LVGI 0.97560.98291.03081.0451.08031.04551.02710.88560.89980.9125
TATA -0.0401-0.0469-0.1135-0.1093-0.1271-0.1218-0.0513-0.0437-0.0505-0.0489
M-score -2.69-2.76-3.16-3.15-3.25-3.18-2.72-2.59-2.58-2.56
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