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Adtran, Inc. (NAS:ADTN)
Beneish M-Score
-2.51 (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 -2.19 signals that the company is a manipulator.

ADTN' s 10-Year Beneish M-Score Range
Min: -3.5   Max: -1.49
Current: -2.51

-3.5
-1.49

During the past 13 years, the highest Beneish M-Score of Adtran, Inc. was -1.49. The lowest was -3.50. And the median was -2.60.


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 * 1.2834+0.528 * 1.0113+0.404 * 1.102+0.892 * 1.0268+0.115 * 0.9852
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.979+4.679 * -0.005-0.327 * 1.0514
=-2.19

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

This Year (Mar14) TTM:Last Year (Mar13) TTM:
Accounts Receivable was $129.5 Mil.
Revenue was 147.004 + 159.094 + 177.404 + 162.233 = $645.7 Mil.
Gross Profit was 77.79 + 76.864 + 82.547 + 79.798 = $317.0 Mil.
Total Current Assets was $379.0 Mil.
Total Assets was $791.3 Mil.
Property, Plant and Equipment(Net PPE) was $75.9 Mil.
Depreciation, Depletion and Amortization(DDA) was $14.5 Mil.
Selling, General & Admin. Expense(SGA) was $132.7 Mil.
Total Current Liabilities was $120.0 Mil.
Long-Term Debt was $30.0 Mil.
Net Income was 9.607 + 11.84 + 16.205 + 9.859 = $47.5 Mil.
Non Operating Income was 2.314 + 2.275 + 1.773 + 1.682 = $8.0 Mil.
Cash Flow from Operations was 9.899 + 7.775 + 22.558 + 3.183 = $43.4 Mil.
Accounts Receivable was $98.3 Mil.
Revenue was 143.013 + 139.756 + 162.125 + 183.998 = $628.9 Mil.
Gross Profit was 69.677 + 67.383 + 79.972 + 95.201 = $312.2 Mil.
Total Current Assets was $459.3 Mil.
Total Assets was $874.3 Mil.
Property, Plant and Equipment(Net PPE) was $77.8 Mil.
Depreciation, Depletion and Amortization(DDA) was $14.6 Mil.
Selling, General & Admin. Expense(SGA) was $132.0 Mil.
Total Current Liabilities was $111.7 Mil.
Long-Term Debt was $46.0 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)
=(129.491 / 645.735) / (98.266 / 628.892)
=0.20053273 / 0.15625258
=1.2834

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)
=(76.864 / 628.892) / (77.79 / 645.735)
=0.49648111 / 0.49091191
=1.0113

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 - (379.048 + 75.885) / 791.301) / (1 - (459.3 + 77.781) / 874.336)
=0.42508224 / 0.385727
=1.102

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
=645.735 / 628.892
=1.0268

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))
=(14.647 / (14.647 + 77.781)) / (14.545 / (14.545 + 75.885))
=0.1584693 / 0.16084264
=0.9852

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)
=(132.702 / 645.735) / (132.015 / 628.892)
=0.20550535 / 0.20991681
=0.979

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)
=((30 + 120.033) / 791.301) / ((46 + 111.677) / 874.336)
=0.18960295 / 0.18033914
=1.0514

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
=(47.511 - 8.044 - 43.415) / 791.301
=-0.005

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 -2.19 signals that the company is likely to 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

Dec04Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13
DSRI 0.86720.87251.02691.1130.71851.34060.85990.93451.2911.0491
GMI 0.97430.97191.00150.99430.99421.00731.00031.02571.13221.06
AQI 0.75640.87521.34130.64451.34950.94921.30581.12930.94881.0365
SGI 1.14581.12910.92111.00861.05010.96711.25091.18420.86531.034
DEPI 0.921.09241.12960.82551.24380.96950.95780.94160.88760.9323
SGAI 0.96390.92881.16020.99430.95190.99560.9220.91941.24490.93
LVGI 1.01021.00931.17531.04870.97650.90690.83230.94171.29231.0968
TATA -0.0247-0.0452-0.0299-0.0309-0.075-0.02620.0159-0.0291-0.0567-0.0274
M-score -2.71-2.74-2.60-2.69-2.86-2.31-2.12-2.42-2.70-2.51

Adtran, Inc. Quarterly Data

Dec11Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14
DSRI 0.93450.80021.32411.17121.2911.29491.09191.21891.04911.2834
GMI 1.02571.04571.07051.09681.13221.14321.12661.10411.061.0113
AQI 1.12930.92390.88830.85080.94880.85820.95431.0021.03651.102
SGI 1.18421.06561.01210.92770.86530.91620.88480.94861.0341.0268
DEPI 0.94160.93450.94210.91050.88760.84760.83320.88340.93230.9852
SGAI 0.91941.02971.10351.20721.24491.12191.09090.98750.930.979
LVGI 0.94170.93431.2791.18081.29231.30441.13431.16111.09681.0514
TATA -0.0291-0.0388-0.0368-0.0493-0.0567-0.0643-0.0677-0.0513-0.0274-0.005
M-score -2.42-2.78-2.47-2.73-2.70-2.70-2.85-2.57-2.51-2.19
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