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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 Staples Inc was -0.94. The lowest was -3.30. 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 * 1.0467||+||0.528 * 0.9945||+||0.404 * 1.4257||+||0.892 * 0.9457||+||0.115 * 0.9853|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0097||+||4.679 * -0.0454||-||0.327 * 1.2573|
|This Year (Apr16) TTM:||Last Year (Apr15) TTM:|
|Accounts Receivable was $1,846 Mil.|
Revenue was 5101 + 5268 + 5593 + 4937 = $20,899 Mil.
Gross Profit was 1288 + 1382 + 1522 + 1264 = $5,456 Mil.
Total Current Assets was $5,289 Mil.
Total Assets was $12,815 Mil.
Property, Plant and Equipment(Net PPE) was $1,552 Mil.
Depreciation, Depletion and Amortization(DDA) was $450 Mil.
Selling, General & Admin. Expense(SGA) was $4,550 Mil.
Total Current Liabilities was $3,320 Mil.
Long-Term Debt was $3,489 Mil.
Net Income was 41 + 86 + 198 + 36 = $361 Mil.
Non Operating Income was 3 + -4 + -8 + -2 = $-11 Mil.
Cash Flow from Operations was 276 + 275 + 403 + 0 = $954 Mil.
|Accounts Receivable was $1,865 Mil.
Revenue was 5262 + 5656.467 + 5961.531 + 5220.103 = $22,100 Mil.
Gross Profit was 1347 + 1486.423 + 1596.276 + 1308.043 = $5,738 Mil.
Total Current Assets was $5,381 Mil.
Total Assets was $10,438 Mil.
Property, Plant and Equipment(Net PPE) was $1,644 Mil.
Depreciation, Depletion and Amortization(DDA) was $468 Mil.
Selling, General & Admin. Expense(SGA) was $4,765 Mil.
Total Current Liabilities was $3,391 Mil.
Long-Term Debt was $1,020 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)|
|=||(1846 / 20899)||/||(1865 / 22100.101)|
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)|
|=||(5737.742 / 22100.101)||/||(5456 / 20899)|
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 - (5289 + 1552) / 12815)||/||(1 - (5381 + 1644) / 10438)|
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))|
|=||(467.66 / (467.66 + 1644))||/||(450 / (450 + 1552))|
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)|
|=||(4550 / 20899)||/||(4765.286 / 22100.101)|
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)|
|=||((3489 + 3320) / 12815)||/||((1020 + 3391) / 10438)|
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|
|=||(361 - -11||-||954)||/||12815|
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 -2.62 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