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Adtran Inc (NAS:ADTN)
Beneish M-Score
-2.87 (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.

Adtran Inc has a M-score of -2.87 suggests that the company is not a manipulator.

ADTN' s Beneish M-Score Range Over the Past 10 Years
Min: -14529.48   Max: 14881.24
Current: -2.87

-14529.48
14881.24

During the past 13 years, the highest Beneish M-Score of Adtran Inc was 14881.24. The lowest was -14529.48. 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 Adtran 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 * 0.925+0.528 * 1.0986+0.404 * 0.8249+0.892 * 0.9379+0.115 * 0.997
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9987+4.679 * -0.0391-0.327 * 1.1848
=-2.87

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

This Year (Sep15) TTM:Last Year (Sep14) TTM:
Accounts Receivable was $86.2 Mil.
Revenue was 158.078 + 160.138 + 142.835 + 143.982 = $605.0 Mil.
Gross Profit was 70.649 + 68.246 + 65.563 + 68.483 = $272.9 Mil.
Total Current Assets was $357.0 Mil.
Total Assets was $671.9 Mil.
Property, Plant and Equipment(Net PPE) was $73.7 Mil.
Depreciation, Depletion and Amortization(DDA) was $14.5 Mil.
Selling, General & Admin. Expense(SGA) was $125.0 Mil.
Total Current Liabilities was $127.0 Mil.
Long-Term Debt was $28.8 Mil.
Net Income was 7.067 + 2.544 + 3.317 + 9.292 = $22.2 Mil.
Non Operating Income was 2.112 + 2.708 + 2.762 + 2.849 = $10.4 Mil.
Cash Flow from Operations was 2.055 + 8.199 + 13.015 + 14.817 = $38.1 Mil.
Accounts Receivable was $99.3 Mil.
Revenue was 162.892 + 176.129 + 147.004 + 159.094 = $645.1 Mil.
Gross Profit was 78.257 + 86.797 + 77.79 + 76.864 = $319.7 Mil.
Total Current Assets was $348.8 Mil.
Total Assets was $750.7 Mil.
Property, Plant and Equipment(Net PPE) was $75.2 Mil.
Depreciation, Depletion and Amortization(DDA) was $14.7 Mil.
Selling, General & Admin. Expense(SGA) was $133.4 Mil.
Total Current Liabilities was $117.0 Mil.
Long-Term Debt was $30.0 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)
=(86.176 / 605.033) / (99.341 / 645.119)
=0.1424319 / 0.15398864
=0.925

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)
=(68.246 / 645.119) / (70.649 / 605.033)
=0.49557989 / 0.45111754
=1.0986

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 - (356.959 + 73.656) / 671.854) / (1 - (348.76 + 75.201) / 750.734)
=0.35906462 / 0.43527135
=0.8249

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
=605.033 / 645.119
=0.9379

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))
=(14.734 / (14.734 + 75.201)) / (14.483 / (14.483 + 73.656))
=0.16382943 / 0.16431999
=0.997

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)
=(124.996 / 605.033) / (133.449 / 645.119)
=0.20659369 / 0.20685951
=0.9987

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)
=((28.8 + 127.048) / 671.854) / ((30 + 116.987) / 750.734)
=0.23196706 / 0.19579105
=1.1848

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
=(22.22 - 10.431 - 38.086) / 671.854
=-0.0391

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.

Adtran Inc has a M-score of -2.87 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.

Adtran Inc Annual Data

Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15
DSRI 0.93041.23420.71081.33390.83290.90681.20951.04161.02270.8764
GMI 1.00150.99430.99421.00731.00031.02571.13221.060.9741.111
AQI 1.34130.64451.34950.94921.30581.12930.94881.03651.00280.8541
SGI 0.92111.00861.05010.96711.25091.18420.86531.0340.98170.9525
DEPI 1.12960.82551.24380.96950.95780.94160.88760.93230.96711.0166
SGAI 1.16020.99430.95190.99560.9220.91941.24490.931.0390.9829
LVGI 1.17531.04870.97650.90690.83230.94171.29231.09681.06430.9518
TATA -0.0299-0.0309-0.075-0.02620.0159-0.0291-0.0567-0.0274-0.0266-0.0139
M-score -2.69-2.58-2.87-2.31-2.15-2.45-2.77-2.52-2.64-2.68

Adtran Inc Quarterly Data

Sep13Dec13Mar14Jun14Sep14Dec14Mar15Jun15Sep15Dec15
DSRI 1.10891.04161.19241.02730.88731.02270.93270.8340.9250.8764
GMI 1.10411.061.01130.99540.97070.9741.02721.06771.09861.111
AQI 1.0021.03651.1021.12331.11591.00280.85060.80260.82490.8541
SGI 0.94861.0341.02681.08651.03650.98170.96920.92450.93790.9525
DEPI 0.88340.93230.98520.98040.97340.96710.95460.98360.9971.0166
SGAI 0.98750.930.9790.95621.011.0391.00371.030.99870.9829
LVGI 1.16111.09681.05141.02010.941.06431.13951.2021.18480.9518
TATA -0.0508-0.0274-0.0051-0.0126-0.0132-0.0266-0.0397-0.0531-0.0391-0.0139
M-score -2.67-2.52-2.27-2.39-2.57-2.64-2.85-3.07-2.87-2.68
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