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Otelco, Inc. (NAS:OTT)
Beneish M-Score
-6.80 (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.

Otelco, Inc. has a M-score of -8.86 suggests that the company is not a manipulator.

OTT' s 10-Year Beneish M-Score Range
Min: -7.23   Max: -1.8
Current: -6.8

-7.23
-1.8

During the past 13 years, the highest Beneish M-Score of Otelco, Inc. was -1.80. The lowest was -7.23. And the median was -2.59.


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 Otelco, 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 * 1.0196+0.528 * 1.0772+0.404 * 1.1827+0.892 * 0.8165+0.115 * 1.3502
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9583+4.679 * -0.1435-0.327 * 18.5222
=-8.86

* 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 $8.00 Mil.
Revenue was 18.782 + 19.338 + 18.98 + 19.666 = $76.77 Mil.
Gross Profit was 9.385 + 10.104 + 10.068 + 10.738 = $40.30 Mil.
Total Current Assets was $19.05 Mil.
Total Assets was $127.61 Mil.
Property, Plant and Equipment(Net PPE) was $53.56 Mil.
Depreciation, Depletion and Amortization(DDA) was $11.85 Mil.
Selling, General & Admin. Expense(SGA) was $10.71 Mil.
Total Current Liabilities was $16.80 Mil.
Long-Term Debt was $115.06 Mil.
Net Income was 1.394 + -0.202 + 1.472 + 109.648 = $112.31 Mil.
Non Operating Income was 0.654 + -0.035 + -0.946 + 111.694 = $111.37 Mil.
Cash Flow from Operations was 4.3 + 5.664 + 2.453 + 6.842 = $19.26 Mil.
Accounts Receivable was $9.61 Mil.
Revenue was 20.988 + 23.888 + 24.428 + 24.714 = $94.02 Mil.
Gross Profit was 11.335 + 13.694 + 14.067 + 14.065 = $53.16 Mil.
Total Current Assets was $50.50 Mil.
Total Assets was $168.46 Mil.
Property, Plant and Equipment(Net PPE) was $56.57 Mil.
Depreciation, Depletion and Amortization(DDA) was $18.32 Mil.
Selling, General & Admin. Expense(SGA) was $13.69 Mil.
Total Current Liabilities was $9.40 Mil.
Long-Term Debt was $0.00 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)
=(8.003 / 76.766) / (9.613 / 94.018)
=0.10425188 / 0.10224638
=1.0196

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)
=(10.104 / 94.018) / (9.385 / 76.766)
=0.56543428 / 0.52490686
=1.0772

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 - (19.047 + 53.562) / 127.605) / (1 - (50.501 + 56.572) / 168.46)
=0.43098625 / 0.36440104
=1.1827

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
=76.766 / 94.018
=0.8165

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))
=(18.32 / (18.32 + 56.572)) / (11.851 / (11.851 + 53.562))
=0.24461892 / 0.18117194
=1.3502

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)
=(10.709 / 76.766) / (13.687 / 94.018)
=0.13950186 / 0.14557851
=0.9583

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)
=((115.061 + 16.795) / 127.605) / ((0 + 9.398) / 168.46)
=1.03331374 / 0.05578772
=18.5222

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
=(112.312 - 111.367 - 19.259) / 127.605
=-0.1435

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.

Otelco, Inc. has a M-score of -8.86 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.

Otelco, Inc. Annual Data

Dec04Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13
DSRI 1.04840.91221.09980.88260.9470.99810.91371.25080.99680.8295
GMI 1.01991.0431.0841.0691.01581.03040.99771.06430.99511.0627
AQI 0.99631.01090.92641.02121.06230.99441.00531.00120.53061.1224
SGI 1.1041.26051.2261.21121.10561.34551.00620.97550.96620.8025
DEPI 0.96850.8381.02890.7271.21320.61841.02571.15060.94481.3208
SGAI 1.37380.69361.0061.03930.97480.93750.91741.0181.11690.9903
LVGI 1.44741.0111.01350.87831.06561.03561.03351.01151.90460.6196
TATA -0.0635-0.0556-0.0755-0.071-0.0547-0.089-0.0788-0.0627-0.9122-0.1446
M-score -2.85-2.53-2.53-2.69-2.65-2.62-2.92-2.52-7.30-3.24

Otelco, Inc. Quarterly Data

Dec11Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14
DSRI 1.25081.12331.04860.99570.99680.94630.87780.86410.82951.0196
GMI 1.06431.0551.04671.02510.99511.00431.00971.0351.06711.0772
AQI 1.00120.99510.58930.57420.53060.52111.00351.0331.12241.1827
SGI 0.97550.97910.98110.98060.96620.92330.88060.83390.80250.8165
DEPI 1.15061.18391.00690.98110.94480.93441.14421.25161.32081.3502
SGAI 1.0180.99741.07751.08781.11691.15231.03581.0550.97480.9583
LVGI 1.01151.00841.92341.90181.90460.06280.61580.61340.619618.5222
TATA -0.0627-0.0652-0.9168-0.9096-0.9122-0.9168-0.197-0.1617-0.1446-0.1435
M-score -2.52-2.64-7.20-7.23-7.30-6.81-3.48-3.33-3.24-8.86
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