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Otelco, Inc. (NAS:OTT)
Beneish M-Score
-6.80 (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 -3.24 suggests that the company is not a manipulator.

OTT' s 10-Year Beneish M-Score Range
Min: -7.23   Max: -1.8
Current: -6.8

-7.23
-1.8

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.


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 * 0.8295+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
=-3.24

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

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

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)
=(7.686 / 78.972) / (11.546 / 98.404)
=0.09732563 / 0.11733263
=0.8295

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)
=(10.068 / 98.404) / (10.104 / 78.972)
=0.57082029 / 0.53715241
=1.0627

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 - (22.024 + 54.462) / 131.678) / (1 - (49.732 + 58.243) / 172.325)
=0.41914367 / 0.37342231
=1.1224

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
=78.972 / 98.404
=0.8025

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))
=0.24867131 / 0.18827317
=1.3208

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)
=0.14103733 / 0.14240275
=0.9904

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)
=1.04270265 / 1.68275062
=0.6196

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
=(109.144 - 109.533 - 18.65) / 131.678
=-0.1446

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.


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 1.04840.91221.09980.88260.9470.99810.91371.25080.99680.8295
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 -2.85-2.53-2.53-2.69-2.65-2.62-2.92-2.52-7.30-3.24

Otelco, Inc. Quarterly Data

Sep11Dec11Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13
DSRI 1.68751.25081.12331.04860.99570.99680.94630.87780.86410.8295
GMI 1.03871.06431.0551.04671.02510.99511.0011.00611.03111.0627
AQI 1.00831.00120.99510.58930.57420.53060.52111.00351.0331.1224
SGI 0.97740.97550.97910.98110.98060.96620.92330.88060.83390.8025
DEPI 1.08641.15061.18391.00690.98110.94480.93441.14421.25161.3208
SGAI 0.94811.0180.99741.07751.08781.11691.16721.05051.07040.9904
LVGI 1.0231.01151.00841.92341.90181.90460.06280.61580.61340.6196
TATA -0.0701-0.0627-0.0652-0.9168-0.9096-0.9122-0.9168-0.197-0.1617-0.1446
M-score -2.16-2.52-2.64-7.20-7.23-7.30-6.81-3.48-3.34-3.24
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