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Otelco, Inc. (NAS:OTT)
Beneish M-Score
-3.08 (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 -3.08 suggests that the company is not a manipulator.

OTT' s Beneish M-Score Range Over the Past 10 Years
Min: -7.29   Max: -2.01
Current: -3.08

-7.29
-2.01

During the past 13 years, the highest Beneish M-Score of Otelco, Inc. was -2.01. The lowest was -7.29. And the median was -2.88.


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 * 0.9779+0.528 * 0.972+0.404 * 0.9897+0.892 * 0.9625+0.115 * 1.1317
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9374+4.679 * -0.1231-0.327 * 0.9165
=-3.08

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

This Year (Dec15) TTM:Last Year (Dec14) TTM:
Accounts Receivable was $6.91 Mil.
Revenue was 17.717 + 17.85 + 17.892 + 17.643 = $71.10 Mil.
Gross Profit was 9.558 + 9.549 + 9.486 + 9.386 = $37.98 Mil.
Total Current Assets was $18.53 Mil.
Total Assets was $118.58 Mil.
Property, Plant and Equipment(Net PPE) was $49.81 Mil.
Depreciation, Depletion and Amortization(DDA) was $8.88 Mil.
Selling, General & Admin. Expense(SGA) was $9.85 Mil.
Total Current Liabilities was $10.87 Mil.
Long-Term Debt was $97.05 Mil.
Net Income was 1.844 + 1.85 + 1.655 + 2.135 = $7.48 Mil.
Non Operating Income was 0.007 + 0.014 + -0.017 + 1.064 = $1.07 Mil.
Cash Flow from Operations was 5.489 + 3.669 + 5.069 + 6.786 = $21.01 Mil.
Accounts Receivable was $7.34 Mil.
Revenue was 18.178 + 18.421 + 18.488 + 18.782 = $73.87 Mil.
Gross Profit was 9.422 + 9.658 + 9.889 + 9.385 = $38.35 Mil.
Total Current Assets was $17.78 Mil.
Total Assets was $120.67 Mil.
Property, Plant and Equipment(Net PPE) was $51.24 Mil.
Depreciation, Depletion and Amortization(DDA) was $10.58 Mil.
Selling, General & Admin. Expense(SGA) was $10.91 Mil.
Total Current Liabilities was $14.36 Mil.
Long-Term Debt was $105.47 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)
=(6.907 / 71.102) / (7.338 / 73.869)
=0.09714213 / 0.09933802
=0.9779

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)
=(9.549 / 73.869) / (9.558 / 71.102)
=0.51921645 / 0.53414813
=0.972

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 - (18.529 + 49.811) / 118.581) / (1 - (17.776 + 51.237) / 120.669)
=0.42368508 / 0.42808012
=0.9897

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
=71.102 / 73.869
=0.9625

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))
=(10.583 / (10.583 + 51.237)) / (8.878 / (8.878 + 49.811))
=0.17119055 / 0.15127196
=1.1317

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)
=(9.847 / 71.102) / (10.913 / 73.869)
=0.13849118 / 0.1477345
=0.9374

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)
=((97.052 + 10.871) / 118.581) / ((105.47 + 14.356) / 120.669)
=0.91012051 / 0.99301395
=0.9165

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
=(7.484 - 1.068 - 21.013) / 118.581
=-0.1231

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 -3.08 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 1.28220.82810.70091.38490.94830.45450.99931.1052.10320.9779
GMI 1.0841.0691.01581.03040.99771.06430.9951.07921.01880.972
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 1.02890.7271.21320.61841.02571.15060.94481.32081.09981.1317
SGAI 1.0061.03930.97480.93750.91741.0181.1170.93271.11230.9374
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 -2.36-2.74-2.88-2.27-2.88-3.25-7.29-2.97-2.01-3.08

Otelco, Inc. Quarterly Data

Sep13Dec13Mar14Jun14Sep14Dec14Mar15Jun15Sep15Dec15
DSRI 1.00681.1051.08291.08080.99252.10320.99881.99022.2850.9779
GMI 1.04211.07921.091.07851.05191.01870.98370.9840.97980.972
AQI 1.0331.12241.18271.06161.06131.02130.98330.97140.97870.9897
SGI 0.83390.80250.81650.84960.89830.93540.94740.95430.95380.9625
DEPI 1.25161.32081.35021.25391.1771.09981.09571.11681.11971.1317
SGAI 1.02760.93270.91591.03191.00011.11231.12561.0491.0620.9374
LVGI 0.61340.619618.52220.97670.96670.95230.94270.9370.93770.9165
TATA -0.1617-0.1446-0.1435-0.1103-0.1391-0.1102-0.1282-0.1236-0.1104-0.1231
M-score -3.19-2.97-8.79-2.96-3.15-2.01-3.14-2.18-1.85-3.08
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