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Otelco, Inc. (NAS:OTT)
Beneish M-Score
-2.94 (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 -2.95 suggests that the company is not a manipulator.

OTT' s 10-Year Beneish M-Score Range
Min: -7.29   Max: -2.27
Current: -2.94

-7.29
-2.27

During the past 13 years, the highest Beneish M-Score of Otelco, Inc. was -2.27. 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 * 1.0697+0.528 * 1.0187+0.404 * 1.0303+0.892 * 0.9354+0.115 * 1.0998
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.105+4.679 * -0.1081-0.327 * 0.9429
=-2.95

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

This Year (Dec14) TTM:Last Year (Dec13) TTM:
Accounts Receivable was $3.73 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 $18.32 Mil.
Total Assets was $122.43 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 $10.84 Mil.
Total Current Liabilities was $14.90 Mil.
Long-Term Debt was $105.47 Mil.
Net Income was 0.94 + 1.387 + 1.308 + 1.394 = $5.03 Mil.
Non Operating Income was -0.133 + -0.306 + -0.077 + 0.654 = $0.14 Mil.
Cash Flow from Operations was 3.053 + 5.25 + 5.519 + 4.3 = $18.12 Mil.
Accounts Receivable was $3.73 Mil.
Revenue was 19.338 + 18.98 + 19.666 + 20.988 = $78.97 Mil.
Gross Profit was 9.943 + 9.915 + 10.579 + 11.335 = $41.77 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 $10.49 Mil.
Total Current Liabilities was $16.11 Mil.
Long-Term Debt was $121.19 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)
=(3.732 / 73.869) / (3.73 / 78.972)
=0.05052187 / 0.04723193
=1.0697

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)
=(9.658 / 78.972) / (9.422 / 73.869)
=0.52894697 / 0.51921645
=1.0187

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 - (18.323 + 51.237) / 122.432) / (1 - (22.024 + 54.462) / 131.678)
=0.43184788 / 0.41914367
=1.0303

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
=73.869 / 78.972
=0.9354

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))
=(12.632 / (12.632 + 54.462)) / (10.583 / (10.583 + 51.237))
=0.18827317 / 0.17119055
=1.0998

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)
=(10.841 / 73.869) / (10.489 / 78.972)
=0.1467598 / 0.13281923
=1.105

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)
=((105.47 + 14.903) / 122.432) / ((121.192 + 16.109) / 131.678)
=0.9831825 / 1.04270265
=0.9429

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
=(5.029 - 0.138 - 18.122) / 122.432
=-0.1081

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 -2.95 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

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

Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14Dec14
DSRI 0.48030.99931.06561.14181.00681.1051.08291.08080.99251.0697
GMI 1.02510.99511.00431.01291.04211.07921.091.07851.05191.0187
AQI 0.57420.53060.52111.00351.0331.12241.18271.06161.06131.0303
SGI 0.98060.96620.92330.88060.83390.80250.81650.84960.89830.9354
DEPI 0.98110.94480.93441.14421.25161.32081.35021.25391.1771.0998
SGAI 1.08781.11691.15231.02251.02750.93270.91591.0250.99331.105
LVGI 1.90181.90460.06280.61580.61340.619618.52220.97670.96670.9429
TATA -0.9096-0.9122-0.9168-0.197-0.1617-0.1446-0.1435-0.1098-0.1385-0.1081
M-score -7.70-7.29-6.70-3.23-3.19-2.97-8.79-2.95-3.14-2.95
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