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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 -0.46. The lowest was -5.06. And the median was -2.68.
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 * 0.9433||+||0.528 * 0.9771||+||0.404 * 0.8618||+||0.892 * 0.8944||+||0.115 * 0.9838|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0984||+||4.679 * -0.4673||-||0.327 * 1.483|
* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.
|This Year (Mar16) TTM:||Last Year (Mar15) TTM:|
|Accounts Receivable was $93.1 Mil.|
Revenue was 110.723 + 129.815 + 121.968 + 122.345 = $484.9 Mil.
Gross Profit was 80.588 + 92.449 + 87.376 + 86.939 = $347.4 Mil.
Total Current Assets was $125.5 Mil.
Total Assets was $394.4 Mil.
Property, Plant and Equipment(Net PPE) was $35.2 Mil.
Depreciation, Depletion and Amortization(DDA) was $14.4 Mil.
Selling, General & Admin. Expense(SGA) was $320.0 Mil.
Total Current Liabilities was $86.4 Mil.
Long-Term Debt was $74.7 Mil.
Net Income was -5.603 + 2.545 + -170.914 + -4.172 = $-178.1 Mil.
Non Operating Income was 0.172 + -0.471 + 0.575 + -11.019 = $-10.7 Mil.
Cash Flow from Operations was 6.398 + 1.698 + 2.221 + 6.596 = $16.9 Mil.
|Accounts Receivable was $110.4 Mil.
Revenue was 121.173 + 146.518 + 134.121 + 140.31 = $542.1 Mil.
Gross Profit was 85.214 + 102.343 + 93.771 + 98.152 = $379.5 Mil.
Total Current Assets was $168.1 Mil.
Total Assets was $655.1 Mil.
Property, Plant and Equipment(Net PPE) was $36.4 Mil.
Depreciation, Depletion and Amortization(DDA) was $14.5 Mil.
Selling, General & Admin. Expense(SGA) was $325.8 Mil.
Total Current Liabilities was $120.7 Mil.
Long-Term Debt was $59.7 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)|
|=||(93.142 / 484.851)||/||(110.408 / 542.122)|
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)|
|=||(379.48 / 542.122)||/||(347.352 / 484.851)|
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 - (125.457 + 35.165) / 394.418)||/||(1 - (168.086 + 36.389) / 655.061)|
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))|
|=||(14.519 / (14.519 + 36.389))||/||(14.356 / (14.356 + 35.165))|
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)|
|=||(320.017 / 484.851)||/||(325.763 / 542.122)|
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)|
|=||((74.718 + 86.38) / 394.418)||/||((59.719 + 120.697) / 655.061)|
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|
|=||(-178.144 - -10.743||-||16.913)||/||394.418|
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 -5.06 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