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Harte-Hanks Inc (NYSE:HHS)
Beneish M-Score
-2.86 (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.

Harte-Hanks Inc has a M-score of -2.86 suggests that the company is not a manipulator.

HHS' s 10-Year Beneish M-Score Range
Min: -3.92   Max: 1.12
Current: -2.86

-3.92
1.12

During the past 13 years, the highest Beneish M-Score of Harte-Hanks Inc was 1.12. The lowest was -3.92. And the median was -2.69.


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 Harte-Hanks 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 * 0.8914+0.528 * 0.9946+0.404 * 1.0264+0.892 * 0.9806+0.115 * 0.6308
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.063+4.679 * -0.0492-0.327 * 0.9662
=-2.86

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

This Year (Jun14) TTM:Last Year (Jun13) TTM:
Accounts Receivable was $114.9 Mil.
Revenue was 140.31 + 132.727 + 152.179 + 134.973 = $560.2 Mil.
Gross Profit was 98.152 + 92.451 + 109.45 + 95.658 = $395.7 Mil.
Total Current Assets was $220.1 Mil.
Total Assets was $662.5 Mil.
Property, Plant and Equipment(Net PPE) was $38.0 Mil.
Depreciation, Depletion and Amortization(DDA) was $15.4 Mil.
Selling, General & Admin. Expense(SGA) was $341.1 Mil.
Total Current Liabilities was $131.5 Mil.
Long-Term Debt was $73.5 Mil.
Net Income was 5.637 + 1.845 + 6.566 + -8.173 = $5.9 Mil.
Non Operating Income was -1.075 + -0.734 + -0.646 + -0.536 = $-3.0 Mil.
Cash Flow from Operations was 5.124 + 6.692 + 24.825 + 4.837 = $41.5 Mil.
Accounts Receivable was $131.5 Mil.
Revenue was 140.105 + 132.352 + 157.848 + 140.993 = $571.3 Mil.
Gross Profit was 99.534 + 93.367 + 109.992 + 98.493 = $401.4 Mil.
Total Current Assets was $228.0 Mil.
Total Assets was $705.4 Mil.
Property, Plant and Equipment(Net PPE) was $57.9 Mil.
Depreciation, Depletion and Amortization(DDA) was $12.9 Mil.
Selling, General & Admin. Expense(SGA) was $327.3 Mil.
Total Current Liabilities was $134.1 Mil.
Long-Term Debt was $91.9 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)
=(114.94 / 560.189) / (131.498 / 571.298)
=0.20518075 / 0.23017409
=0.8914

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)
=(92.451 / 571.298) / (98.152 / 560.189)
=0.70258604 / 0.70638838
=0.9946

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 - (220.103 + 37.988) / 662.511) / (1 - (227.994 + 57.887) / 705.435)
=0.61043515 / 0.59474509
=1.0264

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
=560.189 / 571.298
=0.9806

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))
=(12.896 / (12.896 + 57.887)) / (15.428 / (15.428 + 37.988))
=0.18219064 / 0.28882732
=0.6308

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)
=(341.123 / 560.189) / (327.277 / 571.298)
=0.6089427 / 0.57286565
=1.063

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)
=((73.5 + 131.514) / 662.511) / ((91.875 + 134.055) / 705.435)
=0.30944996 / 0.32027047
=0.9662

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
=(5.875 - -2.991 - 41.478) / 662.511
=-0.0492

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.

Harte-Hanks Inc has a M-score of -2.86 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.

Harte-Hanks Inc Annual Data

Dec04Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13
DSRI 1.0130.99280.98351.07130.91331.04081.12991.03351.15620.9764
GMI 2.4230.9781.03980.40111.03460.99181.00251.00940.89450.9895
AQI 0.95771.04941.0051.02031.04391.00291.00131.00451.01960.9139
SGI 1.09091.10141.04380.98160.93110.79440.95420.98890.7160.963
DEPI 1.16420.92770.96560.91760.90570.98291.20141.02930.84310.9517
SGAI 0.17050.9910.98476.28541.021.03360.97831.02731.11731.0588
LVGI 1.20061.2131.4551.18871.0140.86190.91230.91510.95871.0104
TATA -0.0653-0.0328-0.035-0.0517-0.057-0.0702-0.0433-0.0193-0.2219-0.0673
M-score -1.86-2.62-2.75-3.96-2.87-2.92-2.55-2.52-3.70-2.91

Harte-Hanks Inc Quarterly Data

Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14
DSRI 0.96350.94011.11130.9961.21541.37471.01051.13330.9650.8914
GMI 0.99660.98220.95150.94830.93060.91150.93450.93340.96030.9946
AQI 1.05570.93380.94381.01960.870.96450.99340.91391.01081.0264
SGI 0.97140.93670.85390.83110.77860.73820.80510.82970.9020.9806
DEPI 1.02420.94071.0740.84311.08821.28320.72520.95170.7230.6308
SGAI 1.0291.02931.05241.06331.08851.10591.09091.11261.09381.063
LVGI 0.79650.99650.98150.95871.18550.97780.95451.01040.98240.9662
TATA -0.0391-0.2155-0.2125-0.2219-0.2258-0.0628-0.0793-0.0673-0.0652-0.0492
M-score -2.64-3.65-3.54-3.71-3.69-2.70-3.08-2.92-2.96-2.86
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