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Otelco, Inc. (NAS:OTT)
Beneish M-Score
-3.16 (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 -3.16 suggests that the company is not a manipulator.

OTT' s 10-Year Beneish M-Score Range
Min: -8.81   Max: -2.2
Current: -3.16

-8.81
-2.2

During the past 13 years, the highest Beneish M-Score of Otelco, Inc. was -2.20. The lowest was -8.81. And the median was -2.89.


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 * 0.9925+0.528 * 1.0347+0.404 * 1.0613+0.892 * 0.8983+0.115 * 1.177
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.055+4.679 * -0.1385-0.327 * 0.9667
=-3.16

* 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 $3.47 Mil.
Revenue was 18.421 + 18.488 + 18.782 + 19.338 = $75.03 Mil.
Gross Profit was 9.658 + 9.889 + 9.385 + 10.591 = $39.52 Mil.
Total Current Assets was $17.37 Mil.
Total Assets was $123.33 Mil.
Property, Plant and Equipment(Net PPE) was $51.95 Mil.
Depreciation, Depletion and Amortization(DDA) was $11.00 Mil.
Selling, General & Admin. Expense(SGA) was $11.08 Mil.
Total Current Liabilities was $16.75 Mil.
Long-Term Debt was $107.22 Mil.
Net Income was 1.387 + 1.308 + 1.394 + -0.202 = $3.89 Mil.
Non Operating Income was -0.306 + -0.077 + 0.654 + -0.035 = $0.24 Mil.
Cash Flow from Operations was 5.25 + 5.519 + 4.3 + 5.664 = $20.73 Mil.
Accounts Receivable was $3.89 Mil.
Revenue was 18.98 + 19.666 + 20.988 + 23.888 = $83.52 Mil.
Gross Profit was 9.915 + 10.579 + 11.335 + 13.694 = $45.52 Mil.
Total Current Assets was $25.42 Mil.
Total Assets was $135.10 Mil.
Property, Plant and Equipment(Net PPE) was $53.94 Mil.
Depreciation, Depletion and Amortization(DDA) was $13.96 Mil.
Selling, General & Admin. Expense(SGA) was $11.69 Mil.
Total Current Liabilities was $15.85 Mil.
Long-Term Debt was $124.63 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)
=(3.471 / 75.029) / (3.893 / 83.522)
=0.04626211 / 0.04661047
=0.9925

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)
=(9.889 / 83.522) / (9.658 / 75.029)
=0.54504202 / 0.52676965
=1.0347

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 - (17.37 + 51.951) / 123.327) / (1 - (25.418 + 53.939) / 135.099)
=0.43790897 / 0.41260113
=1.0613

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
=75.029 / 83.522
=0.8983

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))
=(13.964 / (13.964 + 53.939)) / (10.999 / (10.999 + 51.951))
=0.20564629 / 0.17472597
=1.177

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)
=(11.075 / 75.029) / (11.686 / 83.522)
=0.14760959 / 0.13991523
=1.055

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)
=((107.221 + 16.752) / 123.327) / ((124.634 + 15.852) / 135.099)
=1.00523811 / 1.03987446
=0.9667

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
=(3.887 - 0.236 - 20.733) / 123.327
=-0.1385

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 -3.16 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 1.04840.78251.28220.82810.70091.38490.94830.45450.99931.105
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 -2.85-2.65-2.36-2.74-2.88-2.27-2.88-3.25-7.29-2.99

Otelco, Inc. Quarterly Data

Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14
DSRI 1.04620.48030.99931.06561.14181.00681.1051.08291.08080.9925
GMI 1.04671.02510.99511.00431.01291.04211.06271.07261.06091.0347
AQI 0.58930.57420.53060.52111.00351.0331.12241.18271.06161.0613
SGI 0.98110.98060.96620.92330.88060.83390.80250.81650.84960.8983
DEPI 1.00690.98110.94480.93441.14421.25161.32081.35021.25391.177
SGAI 1.07751.08781.11691.15231.02251.02750.99030.97391.08741.055
LVGI 1.92341.90181.90460.06280.61580.61340.619618.52220.97670.9667
TATA -0.9168-0.9096-0.9122-0.9168-0.197-0.1617-0.1446-0.1435-0.1098-0.1385
M-score -7.20-7.70-7.29-6.70-3.23-3.19-2.99-8.81-2.97-3.16
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