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Otelco, Inc. (NAS:OTT)
Beneish M-Score
-3.10 (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 -3.10 suggests that the company is not a manipulator.

OTT' s 10-Year Beneish M-Score Range
Min: -8.8   Max: -2
Current: -3.1

-8.8
-2

During the past 13 years, the highest Beneish M-Score of Otelco, Inc. was -2.00. The lowest was -8.80. And the median was -2.93.


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 * 0.9795+0.528 * 0.9919+0.404 * 0.9714+0.892 * 0.9543+0.115 * 1.1168
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0191+4.679 * -0.1236-0.327 * 0.937
=-3.10

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

This Year (Jun15) TTM:Last Year (Jun14) TTM:
Accounts Receivable was $3.53 Mil.
Revenue was 17.892 + 17.643 + 18.178 + 18.421 = $72.13 Mil.
Gross Profit was 9.486 + 9.386 + 9.422 + 9.658 = $37.95 Mil.
Total Current Assets was $17.64 Mil.
Total Assets was $118.49 Mil.
Property, Plant and Equipment(Net PPE) was $50.23 Mil.
Depreciation, Depletion and Amortization(DDA) was $9.50 Mil.
Selling, General & Admin. Expense(SGA) was $10.73 Mil.
Total Current Liabilities was $113.69 Mil.
Long-Term Debt was $0.00 Mil.
Net Income was 1.655 + 2.135 + 0.94 + 1.387 = $6.12 Mil.
Non Operating Income was -0.017 + 1.064 + -0.133 + -0.306 = $0.61 Mil.
Cash Flow from Operations was 5.069 + 6.786 + 3.053 + 5.25 = $20.16 Mil.
Accounts Receivable was $3.77 Mil.
Revenue was 18.488 + 18.782 + 19.338 + 18.98 = $75.59 Mil.
Gross Profit was 9.889 + 9.385 + 10.104 + 10.068 = $39.45 Mil.
Total Current Assets was $16.63 Mil.
Total Assets was $123.54 Mil.
Property, Plant and Equipment(Net PPE) was $52.58 Mil.
Depreciation, Depletion and Amortization(DDA) was $11.36 Mil.
Selling, General & Admin. Expense(SGA) was $11.03 Mil.
Total Current Liabilities was $16.12 Mil.
Long-Term Debt was $110.39 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)
=(3.526 / 72.134) / (3.772 / 75.588)
=0.04888125 / 0.0499021
=0.9795

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)
=(9.386 / 75.588) / (9.486 / 72.134)
=0.52185532 / 0.52613192
=0.9919

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 - (17.637 + 50.226) / 118.488) / (1 - (16.628 + 52.575) / 123.544)
=0.42725846 / 0.43985139
=0.9714

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
=72.134 / 75.588
=0.9543

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))
=(11.362 / (11.362 + 52.575)) / (9.504 / (9.504 + 50.226))
=0.17770618 / 0.15911602
=1.1168

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)
=(10.729 / 72.134) / (11.032 / 75.588)
=0.14873707 / 0.14594909
=1.0191

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)
=((0 + 113.688) / 118.488) / ((110.394 + 16.115) / 123.544)
=0.95948957 / 1.02399955
=0.937

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
=(6.117 - 0.608 - 20.158) / 118.488
=-0.1236

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 -3.10 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

Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14
DSRI 0.78251.28220.82810.70090.68921.90560.45450.99931.1051.0696
GMI 1.0431.0841.0691.01581.03040.99771.06430.9951.06271.0346
AQI 1.01090.92641.02121.06230.99441.00531.00120.53061.12241.0303
SGI 1.26051.2261.21121.10561.34551.00620.97550.96620.80250.9354
DEPI 0.8381.02890.7271.21320.61841.02571.15060.94481.32081.0998
SGAI 0.69361.0061.03930.97480.93750.91741.0181.11690.99031.0476
LVGI 1.0111.01350.87831.06561.03561.03351.01151.90460.61960.9429
TATA -0.0556-0.0755-0.071-0.0547-0.089-0.0788-0.0627-0.9122-0.1446-0.1087
M-score -2.65-2.36-2.74-2.88-2.91-2.00-3.25-7.29-2.99-2.93

Otelco, Inc. Quarterly Data

Mar13Jun13Sep13Dec13Mar14Jun14Sep14Dec14Mar15Jun15
DSRI 1.06561.14181.00681.1051.08291.08080.99251.06970.99880.9795
GMI 1.00091.00611.0311.06271.08081.07711.05881.03450.99530.9919
AQI 0.52111.00351.0331.12241.18271.06161.06131.03030.98330.9714
SGI 0.92330.88060.83390.80250.81650.84960.89830.93540.94740.9543
DEPI 0.93441.14421.25161.32081.35021.25391.1771.09981.09571.1168
SGAI 1.16721.05051.07040.99040.94611.03380.97481.04751.07591.0191
LVGI 0.06280.61580.61340.619618.52220.97670.96670.94290.94270.937
TATA -0.9168-0.197-0.1617-0.1446-0.1435-0.1103-0.1391-0.1087-0.1282-0.1236
M-score -6.70-3.24-3.21-2.99-8.80-2.96-3.14-2.93-3.12-3.10
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