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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 -5.74. And the median was -2.70.
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 * 0.7087||+||0.528 * 0.9362||+||0.404 * 0.417||+||0.892 * 0.975||+||0.115 * 0.7801|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.1362||+||4.679 * -0.0974||-||0.327 * 0.9883|
* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.
|This Year (Sep16) TTM:||Last Year (Sep15) TTM:|
|Accounts Receivable was $77.8 Mil.|
Revenue was 97.425 + 97.317 + 110.723 + 168.027 = $473.5 Mil.
Gross Profit was 70.15 + 69.89 + 80.588 + 129.599 = $350.2 Mil.
Total Current Assets was $267.9 Mil.
Total Assets was $378.8 Mil.
Property, Plant and Equipment(Net PPE) was $25.9 Mil.
Depreciation, Depletion and Amortization(DDA) was $14.3 Mil.
Selling, General & Admin. Expense(SGA) was $334.3 Mil.
Total Current Liabilities was $155.2 Mil.
Long-Term Debt was $0.0 Mil.
Net Income was -3.041 + -4.263 + -5.603 + 2.545 = $-10.4 Mil.
Non Operating Income was -0.11 + -0.111 + 0.172 + -2.916 = $-3.0 Mil.
Cash Flow from Operations was 4.74 + 15.389 + 6.398 + 2.956 = $29.5 Mil.
|Accounts Receivable was $112.6 Mil.
Revenue was 108.784 + 109.175 + 121.173 + 146.518 = $485.7 Mil.
Gross Profit was 74.669 + 74.087 + 85.214 + 102.343 = $336.3 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 $13.1 Mil.
Selling, General & Admin. Expense(SGA) was $301.8 Mil.
Total Current Liabilities was $174.9 Mil.
Long-Term Debt was $0.0 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)|
|=||(77.779 / 473.492)||/||(112.562 / 485.65)|
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)|
|=||(336.313 / 485.65)||/||(350.227 / 473.492)|
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 - (267.936 + 25.908) / 378.784)||/||(1 - (160.837 + 34.124) / 421.815)|
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))|
|=||(13.084 / (13.084 + 34.124))||/||(14.277 / (14.277 + 25.908))|
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)|
|=||(334.27 / 473.492)||/||(301.764 / 485.65)|
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 + 155.225) / 378.784)||/||((0 + 174.898) / 421.815)|
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|
|=||(-10.362 - -2.965||-||29.483)||/||378.784|
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 -3.54 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