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Adtran Inc (NAS:ADTN)
Beneish M-Score
-2.64 (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 -2.64 suggests that the company is not a manipulator.

ADTN' s 10-Year Beneish M-Score Range
Min: -3.48   Max: -1.54
Current: -2.64

-3.48
-1.54

During the past 13 years, the highest Beneish M-Score of Adtran Inc was -1.54. The lowest was -3.48. And the median was -2.56.


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 * 1.0227+0.528 * 0.974+0.404 * 1.0028+0.892 * 0.9817+0.115 * 0.9671
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.039+4.679 * -0.0266-0.327 * 1.0643
=-2.64

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

This Year (Dec14) TTM:Last Year (Dec13) TTM:
Accounts Receivable was $86.2 Mil.
Revenue was 143.982 + 162.892 + 176.129 + 147.004 = $630.0 Mil.
Gross Profit was 68.483 + 78.257 + 86.797 + 77.79 = $311.3 Mil.
Total Current Assets was $351.1 Mil.
Total Assets was $738.7 Mil.
Property, Plant and Equipment(Net PPE) was $74.8 Mil.
Depreciation, Depletion and Amortization(DDA) was $14.8 Mil.
Selling, General & Admin. Expense(SGA) was $132.0 Mil.
Total Current Liabilities was $119.0 Mil.
Long-Term Debt was $28.8 Mil.
Net Income was 9.292 + 11.326 + 14.395 + 9.607 = $44.6 Mil.
Non Operating Income was 2.849 + 1.724 + 1.566 + 2.314 = $8.5 Mil.
Cash Flow from Operations was 14.817 + 18.041 + 13.08 + 9.899 = $55.8 Mil.
Accounts Receivable was $85.8 Mil.
Revenue was 159.094 + 177.404 + 162.233 + 143.013 = $641.7 Mil.
Gross Profit was 76.864 + 82.547 + 79.798 + 69.677 = $308.9 Mil.
Total Current Assets was $379.6 Mil.
Total Assets was $789.9 Mil.
Property, Plant and Equipment(Net PPE) was $76.7 Mil.
Depreciation, Depletion and Amortization(DDA) was $14.6 Mil.
Selling, General & Admin. Expense(SGA) was $129.4 Mil.
Total Current Liabilities was $102.3 Mil.
Long-Term Debt was $46.2 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)
=(86.158 / 630.007) / (85.814 / 641.744)
=0.13675721 / 0.13371999
=1.0227

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)
=(78.257 / 641.744) / (68.483 / 630.007)
=0.48132277 / 0.49416435
=0.974

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 - (351.089 + 74.828) / 738.694) / (1 - (379.64 + 76.739) / 789.898)
=0.4234189 / 0.42223047
=1.0028

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
=630.007 / 641.744
=0.9817

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))
=(14.628 / (14.628 + 76.739)) / (14.845 / (14.845 + 74.828))
=0.16010157 / 0.16554593
=0.9671

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)
=(131.958 / 630.007) / (129.366 / 641.744)
=0.20945482 / 0.20158506
=1.039

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 + 119.009) / 738.694) / ((46.2 + 102.305) / 789.898)
=0.20009503 / 0.18800529
=1.0643

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
=(44.62 - 8.453 - 55.837) / 738.694
=-0.0266

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 -2.64 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

Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14
DSRI 0.92060.93041.23420.71081.33390.83290.90681.20951.04161.0227
GMI 0.97191.00150.99430.99421.00731.00031.02571.13221.060.974
AQI 0.87521.34130.64451.34950.94921.30581.12930.94881.03651.0028
SGI 1.12910.92111.00861.05010.96711.25091.18420.86531.0340.9817
DEPI 1.09241.12960.82551.24380.96950.95780.94160.88760.93230.9671
SGAI 0.92881.16020.99430.95190.99560.9220.91941.24490.931.039
LVGI 1.00931.17531.04870.97650.90690.83230.94171.29231.09681.0643
TATA -0.0452-0.0299-0.0309-0.075-0.02620.0159-0.0291-0.0567-0.0274-0.0266
M-score -2.69-2.69-2.58-2.87-2.31-2.15-2.45-2.77-2.52-2.64

Adtran Inc Quarterly Data

Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14Dec14
DSRI 1.2351.20951.19810.98731.10891.04161.19241.02730.88731.0227
GMI 1.09681.13221.14321.12661.10411.061.01130.99540.97070.974
AQI 0.85080.94880.85820.95431.0021.03651.1021.12331.11591.0028
SGI 0.92770.86530.91620.88480.94861.0341.02681.08651.03650.9817
DEPI 0.91050.88760.84760.83320.88340.93230.98520.98040.97340.9671
SGAI 1.20721.24491.12191.09090.98750.930.9790.95621.011.039
LVGI 1.18081.29231.30441.13431.16111.09681.05141.02010.941.0643
TATA -0.0493-0.0567-0.0642-0.0671-0.0508-0.0274-0.0051-0.0126-0.0132-0.0266
M-score -2.67-2.77-2.79-2.94-2.67-2.52-2.27-2.39-2.57-2.64
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