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Otelco, Inc. (NAS:OTT)
Beneish M-Score
-2.98 (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 -2.98 suggests that the company is not a manipulator.

OTT' s Beneish M-Score Range Over the Past 10 Years
Min: -8.79   Max: -1.85
Current: -2.98

-8.79
-1.85

During the past 13 years, the highest Beneish M-Score of Otelco, Inc. was -1.85. The lowest was -8.79. 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 * 1.0281+0.528 * 0.9859+0.404 * 1.0083+0.892 * 0.9755+0.115 * 1.0935
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9196+4.679 * -0.1174-0.327 * 0.9161
=-2.98

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

This Year (Mar16) TTM:Last Year (Mar15) TTM:
Accounts Receivable was $3.43 Mil.
Revenue was 17.49 + 17.717 + 17.85 + 17.892 = $70.95 Mil.
Gross Profit was 9.359 + 9.558 + 9.549 + 9.486 = $37.95 Mil.
Total Current Assets was $17.43 Mil.
Total Assets was $115.39 Mil.
Property, Plant and Equipment(Net PPE) was $48.65 Mil.
Depreciation, Depletion and Amortization(DDA) was $8.67 Mil.
Selling, General & Admin. Expense(SGA) was $9.79 Mil.
Total Current Liabilities was $11.07 Mil.
Long-Term Debt was $91.90 Mil.
Net Income was 1.75 + 1.844 + 1.85 + 1.655 = $7.10 Mil.
Non Operating Income was 0.619 + 0.007 + 0.014 + -0.017 = $0.62 Mil.
Cash Flow from Operations was 5.791 + 5.489 + 3.669 + 5.069 = $20.02 Mil.
Accounts Receivable was $3.42 Mil.
Revenue was 17.643 + 18.178 + 18.421 + 18.488 = $72.73 Mil.
Gross Profit was 9.386 + 9.422 + 9.658 + 9.889 = $38.36 Mil.
Total Current Assets was $18.78 Mil.
Total Assets was $120.61 Mil.
Property, Plant and Equipment(Net PPE) was $50.72 Mil.
Depreciation, Depletion and Amortization(DDA) was $10.05 Mil.
Selling, General & Admin. Expense(SGA) was $10.92 Mil.
Total Current Liabilities was $17.40 Mil.
Long-Term Debt was $100.09 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)
=(3.426 / 70.949) / (3.416 / 72.73)
=0.04828821 / 0.04696824
=1.0281

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)
=(9.558 / 72.73) / (9.359 / 70.949)
=0.52736147 / 0.53491945
=0.9859

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 - (17.434 + 48.648) / 115.388) / (1 - (18.778 + 50.718) / 120.61)
=0.42730613 / 0.42379571
=1.0083

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
=70.949 / 72.73
=0.9755

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))
=(10.047 / (10.047 + 50.718)) / (8.666 / (8.666 + 48.648))
=0.16534189 / 0.15120215
=1.0935

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)
=(9.793 / 70.949) / (10.916 / 72.73)
=0.13802872 / 0.15008937
=0.9196

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)
=((91.9 + 11.072) / 115.388) / ((100.09 + 17.403) / 120.61)
=0.89239782 / 0.97415637
=0.9161

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
=(7.099 - 0.623 - 20.018) / 115.388
=-0.1174

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 -2.98 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

Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15
DSRI 1.28220.82810.70091.38490.94830.45450.99931.1051.06960.9952
GMI 1.0841.0691.01581.03040.99771.06430.9951.06271.03460.972
AQI 0.92641.02121.06230.99441.00531.00120.53061.12241.02130.9897
SGI 1.2261.21121.10561.34551.00620.97550.96620.80250.93540.9625
DEPI 1.17040.7271.21320.61841.02571.15060.94481.32081.09981.1317
SGAI 1.0061.03930.97480.93750.91741.0181.11690.99031.04760.9374
LVGI 1.01350.87831.06561.03561.03351.01151.90460.61960.95230.9165
TATA -0.0755-0.071-0.0547-0.089-0.0788-0.0627-0.9122-0.1446-0.1102-0.1231
M-score -2.34-2.74-2.88-2.27-2.88-3.25-7.29-2.99-2.94-3.06

Otelco, Inc. Quarterly Data

Dec13Mar14Jun14Sep14Dec14Mar15Jun15Sep15Dec15Mar16
DSRI 1.1051.08291.08080.99251.06970.99881.99022.2850.99521.0281
GMI 1.07921.091.07851.05191.01870.98370.9840.97980.9720.9859
AQI 1.12241.18271.06161.06131.02130.98330.97140.97870.98971.0083
SGI 0.80250.81650.84960.89830.93540.94740.95430.95380.96250.9755
DEPI 1.32081.35021.25391.1771.09981.09571.11681.11971.13171.0935
SGAI 0.93270.91591.03191.00011.11231.12561.0491.0620.93740.9196
LVGI 0.619618.52220.97670.96670.95230.94270.9370.93770.91650.9161
TATA -0.1446-0.1435-0.1103-0.1391-0.1102-0.1282-0.1236-0.1104-0.1231-0.1174
M-score -2.97-8.79-2.96-3.15-2.96-3.14-2.18-1.85-3.06-2.98
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