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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 -4.74. And the median was -2.66.
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 * 1.14||+||0.528 * 0.9962||+||0.404 * 0.8535||+||0.892 * 0.9154||+||0.115 * 0.9969|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.019||+||4.679 * -0.4517||-||0.327 * 1.4228|
|This Year (Sep15) TTM:||Last Year (Sep14) TTM:|
|Accounts Receivable was $112.6 Mil.|
Revenue was 121.968 + 122.345 + 121.173 + 146.518 = $512.0 Mil.
Gross Profit was 87.376 + 86.939 + 85.214 + 102.343 = $361.9 Mil.
Total Current Assets was $160.8 Mil.
Total Assets was $421.8 Mil.
Property, Plant and Equipment(Net PPE) was $34.1 Mil.
Depreciation, Depletion and Amortization(DDA) was $14.4 Mil.
Selling, General & Admin. Expense(SGA) was $317.2 Mil.
Total Current Liabilities was $174.9 Mil.
Long-Term Debt was $0.0 Mil.
Net Income was -170.914 + -4.172 + 1.615 + 10.089 = $-163.4 Mil.
Non Operating Income was 0.575 + -11.019 + 0.407 + 0.331 = $-9.7 Mil.
Cash Flow from Operations was 2.221 + 6.596 + 20.428 + 7.596 = $36.8 Mil.
|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.
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)|
|=||(112.562 / 512.004)||/||(107.867 / 559.337)|
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)|
|=||(86.939 / 559.337)||/||(87.376 / 512.004)|
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 - (160.837 + 34.124) / 421.815)||/||(1 - (201.175 + 36.008) / 641.195)|
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))|
|=||(15.155 / (15.155 + 36.008))||/||(14.425 / (14.425 + 34.124))|
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)|
|=||(317.219 / 512.004)||/||(340.078 / 559.337)|
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)|
|=||((0 + 174.898) / 421.815)||/||((68.906 + 117.947) / 641.195)|
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|
|=||(-163.382 - -9.706||-||36.841)||/||421.815|
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 -4.74 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