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Harte-Hanks Inc (NYSE:HHS)
Beneish M-Score
-2.66 (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 -2.66 suggests that the company is not a manipulator.

HHS' s 10-Year Beneish M-Score Range
Min: -5.35   Max: 1.11
Current: -2.66

-5.35
1.11

During the past 13 years, the highest Beneish M-Score of Harte-Hanks Inc was 1.11. The lowest was -5.35. And the median was -2.63.


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 * 0.99+0.528 * 0.9936+0.404 * 1.0411+0.892 * 0.9561+0.115 * 0.9316
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0605+4.679 * -0.0319-0.327 * 0.9265
=-2.66

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

This Year (Sep14) TTM:Last Year (Sep13) TTM:
Accounts Receivable was $107.9 Mil.
Revenue was 134.121 + 140.31 + 132.727 + 152.179 = $559.3 Mil.
Gross Profit was 93.771 + 98.152 + 92.451 + 109.45 = $393.8 Mil.
Total Current Assets was $201.2 Mil.
Total Assets was $641.2 Mil.
Property, Plant and Equipment(Net PPE) was $36.0 Mil.
Depreciation, Depletion and Amortization(DDA) was $15.2 Mil.
Selling, General & Admin. Expense(SGA) was $340.1 Mil.
Total Current Liabilities was $117.9 Mil.
Long-Term Debt was $68.9 Mil.
Net Income was 6.42 + 5.637 + 1.845 + 6.566 = $20.5 Mil.
Non Operating Income was 0.581 + -1.075 + -0.734 + -0.646 = $-1.9 Mil.
Cash Flow from Operations was 6.149 + 5.124 + 6.692 + 24.825 = $42.8 Mil.
Accounts Receivable was $114.0 Mil.
Revenue was 134.973 + 140.105 + 132.352 + 177.601 = $585.0 Mil.
Gross Profit was 95.658 + 99.534 + 93.367 + 120.719 = $409.3 Mil.
Total Current Assets was $223.1 Mil.
Total Assets was $670.0 Mil.
Property, Plant and Equipment(Net PPE) was $41.4 Mil.
Depreciation, Depletion and Amortization(DDA) was $15.8 Mil.
Selling, General & Admin. Expense(SGA) was $335.4 Mil.
Total Current Liabilities was $123.5 Mil.
Long-Term Debt was $87.3 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)
=(107.867 / 559.337) / (113.963 / 585.031)
=0.19284796 / 0.19479822
=0.99

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)
=(98.152 / 585.031) / (93.771 / 559.337)
=0.69958344 / 0.70409074
=0.9936

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 - (201.175 + 36.008) / 641.195) / (1 - (223.105 + 41.392) / 670.009)
=0.63009225 / 0.60523366
=1.0411

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
=559.337 / 585.031
=0.9561

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))
=(15.777 / (15.777 + 41.392)) / (15.156 / (15.156 + 36.008))
=0.27597124 / 0.29622391
=0.9316

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)
=(340.078 / 559.337) / (335.394 / 585.031)
=0.60800197 / 0.5732927
=1.0605

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)
=((68.906 + 117.947) / 641.195) / ((87.281 + 123.456) / 670.009)
=0.29141369 / 0.31452861
=0.9265

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
=(20.468 - -1.874 - 42.79) / 641.195
=-0.0319

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 -2.66 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 1.0130.99280.98351.07130.91331.04081.07771.04761.00161.1659
GMI 0.9672.3821.03981.04620.39660.99181.02021.0130.97580.8882
AQI 0.95771.04941.0051.02031.04391.00291.00130.99340.94450.9976
SGI 1.09091.10141.04380.98160.93110.79441.00040.98870.90240.7289
DEPI 1.16420.92770.96560.91760.90570.98291.13451.06660.92230.889
SGAI 1.04520.16830.98471.01056.34441.03360.97051.02631.02681.1624
LVGI 1.20061.2131.4551.18871.0140.86190.91230.91920.99750.9667
TATA -0.0653-0.0328-0.035-0.0517-0.057-0.0702-0.0428-0.0193-0.222-0.0673
M-score -2.78-1.73-2.75-2.71-4.12-2.92-2.55-2.50-3.65-2.97

Harte-Hanks Inc Quarterly Data

Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14
DSRI 0.91691.00411.00161.13531.30681.13291.16591.09571.00780.99
GMI 0.99960.99910.97580.95030.92230.88180.88820.91490.94950.9936
AQI 0.93380.94380.94450.870.96450.99340.99761.01081.02641.0411
SGI 0.96030.9450.90240.83360.77650.71810.72890.79440.86740.9561
DEPI 0.93050.89720.92230.95691.11810.92530.8890.87630.77780.9316
SGAI 1.02081.01781.02681.05281.07361.12161.16241.14491.11351.0605
LVGI 0.99650.98150.99751.18550.97780.95450.96670.98240.96620.9265
TATA -0.2155-0.2141-0.222-0.226-0.0629-0.0778-0.0673-0.0652-0.0492-0.0319
M-score -3.64-3.56-3.65-3.71-2.74-3.05-2.97-2.95-2.87-2.66
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