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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.
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 -2.65.
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 * 0.983||+||0.528 * 1.0054||+||0.404 * 1.1294||+||0.892 * 0.9357||+||0.115 * 0.9945|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9948||+||4.679 * -0.027||-||0.327 * 0.8691|
|This Year (Jun15) TTM:||Last Year (Jun14) TTM:|
|Accounts Receivable was $105.7 Mil.|
Revenue was 122.345 + 121.173 + 146.518 + 134.121 = $524.2 Mil.
Gross Profit was 86.939 + 85.214 + 102.343 + 93.771 = $368.3 Mil.
Total Current Assets was $161.4 Mil.
Total Assets was $633.6 Mil.
Property, Plant and Equipment(Net PPE) was $35.4 Mil.
Depreciation, Depletion and Amortization(DDA) was $14.5 Mil.
Selling, General & Admin. Expense(SGA) was $317.5 Mil.
Total Current Liabilities was $115.3 Mil.
Long-Term Debt was $55.1 Mil.
Net Income was -4.172 + 1.615 + 10.089 + 6.42 = $14.0 Mil.
Non Operating Income was -11.019 + 0.407 + 0.331 + 0.581 = $-9.7 Mil.
Cash Flow from Operations was 6.596 + 20.428 + 7.596 + 6.149 = $40.8 Mil.
|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.
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)|
|=||(105.724 / 524.157)||/||(114.94 / 560.189)|
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)|
|=||(85.214 / 560.189)||/||(86.939 / 524.157)|
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 - (161.412 + 35.373) / 633.612)||/||(1 - (220.103 + 37.988) / 662.511)|
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))|
|=||(15.427 / (15.427 + 37.988))||/||(14.478 / (14.478 + 35.373))|
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)|
|=||(317.521 / 524.157)||/||(341.123 / 560.189)|
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)|
|=||((55.125 + 115.273) / 633.612)||/||((73.5 + 131.514) / 662.511)|
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|
|=||(13.952 - -9.7||-||40.769)||/||633.612|
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 -2.58 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
Harte-Hanks Inc Annual Data
Harte-Hanks Inc Quarterly Data