Switch to:
GuruFocus has detected 4 Warning Signs with Overstock.com Inc $OSTK.
More than 500,000 people have already joined GuruFocus to track the stocks they follow and exchange investment ideas.
Overstock.com Inc (NAS:OSTK)
Beneish M-Score
-3.02 (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.

Overstock.com Inc has a M-score of -3.02 suggests that the company is not a manipulator.

OSTK' s Beneish M-Score Range Over the Past 10 Years
Min: -6.1   Max: 1.11
Current: -3.02

-6.1
1.11

During the past 13 years, the highest Beneish M-Score of Overstock.com Inc was 1.11. The lowest was -6.10. And the median was -3.02.


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 * 1.0452+0.528 * 0.9772+0.404 * 1.1405+0.892 * 1.087+0.115 * 1.0512
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0621+4.679 * -0.1452-0.327 * 1.0751
=-3.02

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

This Year (Mar17) TTM:Last Year (Mar16) TTM:
Accounts Receivable was $22 Mil.
Revenue was 432.435 + 526.182 + 441.564 + 418.54 = $1,819 Mil.
Gross Profit was 86.907 + 98.004 + 79.716 + 76.322 = $341 Mil.
Total Current Assets was $191 Mil.
Total Assets was $441 Mil.
Property, Plant and Equipment(Net PPE) was $137 Mil.
Depreciation, Depletion and Amortization(DDA) was $33 Mil.
Selling, General & Admin. Expense(SGA) was $244 Mil.
Total Current Liabilities was $213 Mil.
Long-Term Debt was $55 Mil.
Net Income was -5.903 + 3.095 + -3.098 + -0.904 = $-7 Mil.
Non Operating Income was -3.724 + 4.782 + 1.251 + 3.992 = $6 Mil.
Cash Flow from Operations was -23.097 + 55.003 + 11.543 + 7.521 = $51 Mil.
Accounts Receivable was $19 Mil.
Revenue was 413.677 + 480.27 + 391.211 + 388.013 = $1,673 Mil.
Gross Profit was 77.307 + 83.109 + 72.451 + 73.657 = $307 Mil.
Total Current Assets was $197 Mil.
Total Assets was $392 Mil.
Property, Plant and Equipment(Net PPE) was $107 Mil.
Depreciation, Depletion and Amortization(DDA) was $27 Mil.
Selling, General & Admin. Expense(SGA) was $211 Mil.
Total Current Liabilities was $194 Mil.
Long-Term Debt was $27 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)
=(21.615 / 1818.721) / (19.025 / 1673.171)
=0.01188473 / 0.01137062
=1.0452

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)
=(306.524 / 1673.171) / (340.949 / 1818.721)
=0.18319945 / 0.18746636
=0.9772

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 - (190.638 + 137.296) / 441.301) / (1 - (196.876 + 106.869) / 392.058)
=0.25689269 / 0.22525494
=1.1405

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
=1818.721 / 1673.171
=1.087

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))
=(27.008 / (27.008 + 106.869)) / (32.607 / (32.607 + 137.296))
=0.20173742 / 0.19191539
=1.0512

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)
=(244.118 / 1818.721) / (211.453 / 1673.171)
=0.1342251 / 0.12637859
=1.0621

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)
=((54.924 + 212.564) / 441.301) / ((26.633 + 194.406) / 392.058)
=0.60613504 / 0.56379158
=1.0751

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
=(-6.81 - 6.301 - 50.97) / 441.301
=-0.1452

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 -3.02 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 local exchange's currency.

Overstock.com Inc Annual Data

Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15Dec16
DSRI 1.00440.57831.54780.93720.56862.47810.4350.94430.41911.6665
GMI 0.7080.96950.93251.07991.02430.94110.95061.01871.01430.9983
AQI 0.39160.60120.89211.17471.46160.96838.08760.80491.1380.9195
SGI 0.95891.09531.05921.24310.96731.04271.18641.14791.10741.0857
DEPI 0.70371.08631.25231.11780.87680.90791.24141.35161.21911.1209
SGAI 0.86310.9091.01650.9011.73750.58891.11550.98821.02971.0571
LVGI 1.19781.08140.66751.19931.15710.89710.75161.05050.98570.9908
TATA -0.2331-0.1-0.1924-0.0207-0.2527-0.09430.0031-0.1941-0.13-0.085
M-score -4.08-3.43-2.77-2.34-4.08-1.470.11-3.35-3.44-2.21

Overstock.com Inc Quarterly Data

Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16Dec16Mar17
DSRI 0.94430.84790.86450.98060.41911.12921.15131.16641.66651.0452
GMI 1.01871.0141.00141.00051.01431.02021.03221.03230.99830.9772
AQI 0.80490.87090.86151.36731.1381.02541.0340.71250.91951.1405
SGI 1.14791.16561.17261.1571.10741.07651.05841.06441.08571.087
DEPI 1.35161.14651.24031.13551.21911.30551.3241.25221.12091.0512
SGAI 0.98820.99541.00911.03991.02971.02811.04361.02951.05711.0621
LVGI 1.05051.06611.08890.9530.98570.98321.03661.13480.99081.0751
TATA -0.1941-0.1908-0.1772-0.1335-0.13-0.1458-0.1804-0.1802-0.085-0.1452
M-score -3.35-3.41-3.34-2.81-3.44-2.92-3.08-3.23-2.21-3.02
Get WordPress Plugins for easy affiliate links on Stock Tickers and Guru Names | Earn affiliate commissions by embedding GuruFocus Charts
GuruFocus Affiliate Program: Earn up to $400 per referral. ( Learn More)
FEEDBACK