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Adtran Inc (NAS:ADTN)
Beneish M-Score
-2.40 (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 -2.40 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: -2.4

-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 -2.60.


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 * 1.0164+0.528 * 0.9968+0.404 * 0.9688+0.892 * 0.9871+0.115 * 1.0676
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9859+4.679 * 0.0062-0.327 * 0.8435
=-2.40

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

This Year (Jun16) TTM:Last Year (Jun15) TTM:
Accounts Receivable was $89.4 Mil.
Revenue was 162.701 + 142.204 + 139.013 + 158.078 = $602.0 Mil.
Gross Profit was 78.955 + 65.794 + 62.439 + 70.649 = $277.8 Mil.
Total Current Assets was $344.2 Mil.
Total Assets was $636.6 Mil.
Property, Plant and Equipment(Net PPE) was $74.1 Mil.
Depreciation, Depletion and Amortization(DDA) was $13.7 Mil.
Selling, General & Admin. Expense(SGA) was $124.0 Mil.
Total Current Liabilities was $103.0 Mil.
Long-Term Debt was $27.9 Mil.
Net Income was 10.228 + 5.014 + 5.718 + 7.067 = $28.0 Mil.
Non Operating Income was 0.859 + 1.847 + 1.29 + 2.112 = $6.1 Mil.
Cash Flow from Operations was 4.941 + 15.676 + -4.722 + 2.055 = $18.0 Mil.
Accounts Receivable was $89.1 Mil.
Revenue was 160.138 + 142.835 + 143.982 + 162.892 = $609.8 Mil.
Gross Profit was 68.246 + 65.563 + 68.483 + 78.257 = $280.5 Mil.
Total Current Assets was $384.8 Mil.
Total Assets was $709.0 Mil.
Property, Plant and Equipment(Net PPE) was $73.3 Mil.
Depreciation, Depletion and Amortization(DDA) was $14.6 Mil.
Selling, General & Admin. Expense(SGA) was $127.4 Mil.
Total Current Liabilities was $144.1 Mil.
Long-Term Debt was $28.8 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)
=(89.386 / 601.996) / (89.088 / 609.847)
=0.14848271 / 0.14608254
=1.0164

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)
=(280.549 / 609.847) / (277.837 / 601.996)
=0.46003178 / 0.46152632
=0.9968

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 - (344.235 + 74.115) / 636.558) / (1 - (384.775 + 73.347) / 708.988)
=0.34279359 / 0.35383674
=0.9688

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
=601.996 / 609.847
=0.9871

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))
=(14.634 / (14.634 + 73.347)) / (13.678 / (13.678 + 74.115))
=0.16633137 / 0.1557983
=1.0676

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)
=(124.006 / 601.996) / (127.418 / 609.847)
=0.2059914 / 0.20893437
=0.9859

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)
=((27.9 + 103.021) / 636.558) / ((28.8 + 144.076) / 708.988)
=0.20567018 / 0.24383487
=0.8435

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
=(28.027 - 6.108 - 17.95) / 636.558
=0.0062

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 -2.40 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 0.93041.23420.71081.33390.83290.90681.20951.04161.05050.8532
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 -0.0299-0.0309-0.075-0.02620.0159-0.0289-0.0567-0.0274-0.0266-0.0139
M-score -2.69-2.58-2.87-2.31-2.15-2.44-2.77-2.52-2.62-2.70

Adtran Inc Quarterly Data

Mar14Jun14Sep14Dec14Mar15Jun15Sep15Dec15Mar16Jun16
DSRI 1.19241.02730.88731.05050.93270.8340.9250.85320.77551.0164
GMI 1.01130.99540.97070.9741.02721.06771.09861.1111.07240.9968
AQI 1.1021.12331.11591.00280.85060.80260.82490.85411.01110.9688
SGI 1.02681.08651.03650.98170.96920.92450.93790.95250.95780.9871
DEPI 0.98520.98040.97340.96710.95460.98360.9971.01661.06191.0676
SGAI 0.9790.95621.011.0391.00371.030.99870.98290.9970.9859
LVGI 1.05141.02010.941.06431.13951.2021.18480.95180.86790.8435
TATA -0.0051-0.0126-0.0132-0.0266-0.0397-0.0531-0.0391-0.0139-0.01420.0062
M-score -2.27-2.39-2.57-2.62-2.85-3.07-2.87-2.70-2.70-2.40
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