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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 -3.24 suggests that the company is not a manipulator.
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.
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 * 0.8295||+||0.528 * 1.0627||+||0.404 * 1.1224||+||0.892 * 0.8025||+||0.115 * 1.3208|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9904||+||4.679 * -0.1446||-||0.327 * 0.6196|
|This Year (Dec13) TTM:||Last Year (Dec12) TTM:|
|Accounts Receivable was $7.69 Mil.|
Revenue was 19.338 + 18.98 + 19.666 + 20.988 = $78.97 Mil.
Gross Profit was 10.104 + 10.068 + 10.738 + 11.51 = $42.42 Mil.
Total Current Assets was $22.02 Mil.
Total Assets was $131.68 Mil.
Property, Plant and Equipment(Net PPE) was $54.46 Mil.
Depreciation, Depletion and Amortization(DDA) was $12.63 Mil.
Selling, General & Admin. Expense(SGA) was $11.14 Mil.
Total Current Liabilities was $16.11 Mil.
Long-Term Debt was $121.19 Mil.
Net Income was -0.202 + 1.472 + 109.648 + -1.774 = $109.14 Mil.
Non Operating Income was -0.035 + -0.946 + 111.694 + -1.18 = $109.53 Mil.
Cash Flow from Operations was 5.664 + 2.453 + 6.842 + 3.691 = $18.65 Mil.
|Accounts Receivable was $11.55 Mil.
Revenue was 23.888 + 24.428 + 24.714 + 25.374 = $98.40 Mil.
Gross Profit was 13.694 + 14.067 + 14.065 + 14.345 = $56.17 Mil.
Total Current Assets was $49.73 Mil.
Total Assets was $172.33 Mil.
Property, Plant and Equipment(Net PPE) was $58.24 Mil.
Depreciation, Depletion and Amortization(DDA) was $19.28 Mil.
Selling, General & Admin. Expense(SGA) was $14.01 Mil.
Total Current Liabilities was $289.98 Mil.
Long-Term Debt was $0.00 Mil.
1. DSRI = Days Sales in Receivables Index
A large increase in DSR could be indicative of revenue inflation.
|DSRI||=||(Receivables_t / Revenue_t)||/||(Receivables_t-1 / Revenue_t-1)|
|=||(7.686 / 78.972)||/||(11.546 / 98.404)|
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.
|=||(GrossProfit_t-1 / Revenue_t-1)||/||(GrossProfit_t / Revenue_t)|
|=||(10.068 / 98.404)||/||(10.104 / 78.972)|
3. AQI = Asset Quality Index
AQI is the ratio of asset quality in year t to year t-1.
|AQI||=||(1 - (CurrentAssets_t + PPE_t) / TotalAssets_t)||/||(1 - (CurrentAssets_t-1 + PPE_t-1) / TotalAssets_t-1)|
|=||(1 - (22.024 + 54.462) / 131.678)||/||(1 - (49.732 + 58.243) / 172.325)|
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.
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))|
|=||(19.277 / (19.277 + 58.243))||/||(12.632 / (12.632 + 54.462))|
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)|
|=||(11.138 / 78.972)||/||(14.013 / 98.404)|
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)|
|=||((121.192 + 16.109) / 131.678)||/||((0 + 289.98) / 172.325)|
8. TATA = Total Accruals to Total Assets
Total accruals calculated as the change in working capital accounts other than cash less depreciation.
|=||(NetIncome_t - NonOperatingIncome_t||-||CashFlowsfromOperations_t)||/||TotalAssets_t|
|=||(109.144 - 109.533||-||18.65)||/||131.678|
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 -3.24 suggests that the company will not be a manipulator.
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
Otelco, Inc. Annual Data
Otelco, Inc. Quarterly Data