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Otelco, Inc. (NAS:OTT)
Beneish M-Score
-1.85 (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 -1.85 signals that the company is a manipulator.

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

-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 -2.89.


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 * 2.285+0.528 * 0.9798+0.404 * 0.9787+0.892 * 0.9538+0.115 * 1.1197
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.062+4.679 * -0.1104-0.327 * 0.9377
=-1.85

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

This Year (Sep15) TTM:Last Year (Sep14) TTM:
Accounts Receivable was $7.57 Mil.
Revenue was 17.85 + 17.892 + 17.643 + 18.178 = $71.56 Mil.
Gross Profit was 9.549 + 9.486 + 9.386 + 9.422 = $37.84 Mil.
Total Current Assets was $17.14 Mil.
Total Assets was $117.11 Mil.
Property, Plant and Equipment(Net PPE) was $49.78 Mil.
Depreciation, Depletion and Amortization(DDA) was $9.20 Mil.
Selling, General & Admin. Expense(SGA) was $10.64 Mil.
Total Current Liabilities was $110.38 Mil.
Long-Term Debt was $0.00 Mil.
Net Income was 1.85 + 1.655 + 2.135 + 0.94 = $6.58 Mil.
Non Operating Income was 0.014 + -0.017 + 1.064 + -0.133 = $0.93 Mil.
Cash Flow from Operations was 3.669 + 5.069 + 6.786 + 3.053 = $18.58 Mil.
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 + 9.943 = $38.88 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 $10.50 Mil.
Total Current Liabilities was $16.75 Mil.
Long-Term Debt was $107.22 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)
=(7.565 / 71.563) / (3.471 / 75.029)
=0.10571105 / 0.04626211
=2.285

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)
=(9.486 / 75.029) / (9.549 / 71.563)
=0.51813299 / 0.52880679
=0.9798

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 - (17.135 + 49.78) / 117.105) / (1 - (17.37 + 51.951) / 123.327)
=0.42858973 / 0.43790897
=0.9787

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
=71.563 / 75.029
=0.9538

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))
=(10.999 / (10.999 + 51.951)) / (9.204 / (9.204 + 49.78))
=0.17472597 / 0.15604232
=1.1197

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)
=(10.635 / 71.563) / (10.499 / 75.029)
=0.14861032 / 0.13993256
=1.062

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 + 110.383) / 117.105) / ((107.221 + 16.752) / 123.327)
=0.94259852 / 1.00523811
=0.9377

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
=(6.58 - 0.928 - 18.577) / 117.105
=-0.1104

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 -1.85 signals that the company is likely to 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 0.78251.28220.82810.70091.38490.94830.45450.99931.1051.0696
GMI 1.0431.0841.0691.01581.03040.99771.06430.99511.07921.0188
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 0.69361.0061.03930.97480.93750.91741.0181.11690.93271.1123
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 -2.65-2.36-2.74-2.88-2.27-2.88-3.25-7.29-2.97-2.95

Otelco, Inc. Quarterly Data

Jun13Sep13Dec13Mar14Jun14Sep14Dec14Mar15Jun15Sep15
DSRI 1.14181.00681.1051.08291.08080.99251.06970.99881.99022.285
GMI 1.01291.04211.07921.091.07851.05191.01870.98370.9840.9798
AQI 1.00351.0331.12241.18271.06161.06131.03030.98330.97140.9787
SGI 0.88060.83390.80250.81650.84960.89830.93540.94740.95430.9538
DEPI 1.14421.25161.32081.35021.25391.1771.09981.09571.11681.1197
SGAI 1.02251.02750.93270.91591.03191.00011.11231.12561.0491.062
LVGI 0.61580.61340.619618.52220.97670.96670.94290.94270.9370.9377
TATA -0.197-0.1617-0.1446-0.1435-0.1103-0.1391-0.1087-0.1282-0.1236-0.1104
M-score -3.23-3.19-2.97-8.79-2.96-3.15-2.95-3.14-2.18-1.85
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