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Adtran Inc (NAS:ADTN)
Beneish M-Score
-2.57 (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 -2.57 suggests that the company is not a manipulator.

ADTN' s 10-Year Beneish M-Score Range
Min: -14529.48   Max: 14881.24
Current: -2.57

-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 -2.54.


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 * 0.8873+0.528 * 0.9707+0.404 * 1.1159+0.892 * 1.0365+0.115 * 0.9734
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.01+4.679 * -0.0132-0.327 * 0.94
=-2.57

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

This Year (Sep14) TTM:Last Year (Sep13) TTM:
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.
Net Income was 11.326 + 14.395 + 9.607 + 11.84 = $47.2 Mil.
Non Operating Income was 1.724 + 1.566 + 2.314 + 2.275 = $7.9 Mil.
Cash Flow from Operations was 18.041 + 13.08 + 9.899 + 8.162 = $49.2 Mil.
Accounts Receivable was $108.0 Mil.
Revenue was 177.404 + 162.233 + 143.013 + 139.756 = $622.4 Mil.
Gross Profit was 82.547 + 79.798 + 69.677 + 67.383 = $299.4 Mil.
Total Current Assets was $430.4 Mil.
Total Assets was $833.0 Mil.
Property, Plant and Equipment(Net PPE) was $77.7 Mil.
Depreciation, Depletion and Amortization(DDA) was $14.7 Mil.
Selling, General & Admin. Expense(SGA) was $127.5 Mil.
Total Current Liabilities was $127.0 Mil.
Long-Term Debt was $46.5 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)
=(99.341 / 645.119) / (108.018 / 622.406)
=0.15398864 / 0.1735491
=0.8873

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)
=(86.797 / 622.406) / (78.257 / 645.119)
=0.48104453 / 0.49557989
=0.9707

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 - (348.76 + 75.201) / 750.734) / (1 - (430.396 + 77.658) / 832.984)
=0.43527135 / 0.39007952
=1.1159

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
=645.119 / 622.406
=1.0365

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 + 77.658)) / (14.734 / (14.734 + 75.201))
=0.15947268 / 0.16382943
=0.9734

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)
=(133.449 / 645.119) / (127.475 / 622.406)
=0.20685951 / 0.20481004
=1.01

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 + 116.987) / 750.734) / ((46.5 + 126.999) / 832.984)
=0.19579105 / 0.20828611
=0.94

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
=(47.168 - 7.879 - 49.182) / 750.734
=-0.0132

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 -2.57 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

Dec04Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13
DSRI 1.06180.92060.93041.23420.71081.33390.83290.90681.23251.0221
GMI 0.97430.97191.00150.99430.99421.00731.00031.02571.13221.06
AQI 0.75640.87861.33620.64451.34950.94921.30581.12930.94591.0397
SGI 1.14581.12910.92111.00861.05010.96711.25091.18420.86531.034
DEPI 0.921.09241.12960.82551.05111.14730.95780.94160.88760.9323
SGAI 0.96390.92881.16020.99430.95190.99560.9220.91941.24490.93
LVGI 1.01021.0081.17691.04870.97650.90690.83230.94171.29941.0908
TATA -0.0247-0.0452-0.0299-0.0309-0.075-0.02620.0159-0.0291-0.0562-0.0274
M-score -2.53-2.69-2.69-2.58-2.89-2.29-2.15-2.45-2.75-2.54

Adtran Inc Quarterly Data

Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14
DSRI 1.40631.2351.23251.19810.98731.10891.02211.19241.02730.8873
GMI 1.07051.09681.13221.14321.12661.10411.061.01130.99540.9707
AQI 0.88830.85080.94590.85820.95431.0021.03971.1021.12331.1159
SGI 1.01210.92770.86530.91620.88480.94861.0341.02681.08651.0365
DEPI 0.94210.91050.88760.84760.83320.88340.93230.98520.98040.9734
SGAI 1.10351.20721.24491.12191.09090.98750.930.9790.95621.01
LVGI 1.2791.18081.29941.30441.13431.16111.09081.05141.02010.94
TATA -0.0368-0.0493-0.0562-0.0639-0.0668-0.0505-0.0274-0.0051-0.0126-0.0132
M-score -2.39-2.67-2.75-2.79-2.94-2.67-2.54-2.27-2.39-2.57
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