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Harte-Hanks Inc (NYSE:HHS)
Beneish M-Score
-2.49 (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 -2.49 suggests that the company is not a manipulator.

HHS' s 10-Year Beneish M-Score Range
Min: -3.92   Max: 1.12
Current: -2.49

-3.92
1.12

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 -2.66.


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 * 1.0351+0.528 * 1.013+0.404 * 1.1354+0.892 * 0.9681+0.115 * 0.9898
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9868+4.679 * -0.0241-0.327 * 0.8791
=-2.49

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

This Year (Mar15) TTM:Last Year (Mar14) TTM:
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.
Net Income was 1.615 + 10.089 + 6.42 + 5.637 = $23.8 Mil.
Non Operating Income was 0.407 + 0.331 + 0.581 + -1.075 = $0.2 Mil.
Cash Flow from Operations was 20.428 + 7.596 + 6.149 + 5.124 = $39.3 Mil.
Accounts Receivable was $110.2 Mil.
Revenue was 132.727 + 152.179 + 134.973 + 140.105 = $560.0 Mil.
Gross Profit was 92.451 + 109.45 + 95.658 + 99.534 = $397.1 Mil.
Total Current Assets was $224.2 Mil.
Total Assets was $668.9 Mil.
Property, Plant and Equipment(Net PPE) was $39.4 Mil.
Depreciation, Depletion and Amortization(DDA) was $15.5 Mil.
Selling, General & Admin. Expense(SGA) was $341.0 Mil.
Total Current Liabilities was $131.5 Mil.
Long-Term Debt was $78.1 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)
=(110.408 / 542.122) / (110.178 / 559.984)
=0.20365895 / 0.19675205
=1.0351

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)
=(102.343 / 559.984) / (85.214 / 542.122)
=0.7091149 / 0.69999004
=1.013

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 - (168.086 + 36.389) / 655.061) / (1 - (224.217 + 39.429) / 668.892)
=0.6878535 / 0.60584668
=1.1354

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
=542.122 / 559.984
=0.9681

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))
=(15.508 / (15.508 + 39.429)) / (14.519 / (14.519 + 36.389))
=0.28228698 / 0.28520075
=0.9898

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)
=(325.763 / 542.122) / (340.998 / 559.984)
=0.60090349 / 0.6089424
=0.9868

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)
=((59.719 + 120.697) / 655.061) / ((78.094 + 131.469) / 668.892)
=0.27541863 / 0.31329871
=0.8791

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
=(23.761 - 0.244 - 39.297) / 655.061
=-0.0241

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 -2.49 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

Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14
DSRI 0.99280.98351.07130.91331.04081.12991.03351.15620.97641.0542
GMI 0.9781.03980.40111.03460.99181.00251.00940.89450.98951.0183
AQI 1.04941.0051.02031.04391.00291.00131.00451.01960.91391.0547
SGI 1.10141.04380.98160.93110.79440.95420.98890.7160.9630.9894
DEPI 0.92770.96560.91760.90570.98291.20141.02930.84310.95170.9685
SGAI 0.9910.98476.28541.021.03360.97831.02731.11731.05880.9932
LVGI 1.2131.4551.18871.0140.86190.91230.91510.95871.01040.8936
TATA -0.0328-0.035-0.0517-0.057-0.0702-0.0433-0.0193-0.2219-0.0673-0.001
M-score -2.62-2.75-3.96-2.87-2.92-2.55-2.52-3.70-2.91-2.38

Harte-Hanks Inc Quarterly Data

Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14Dec14Mar15
DSRI 0.9961.21541.37471.01051.13330.9650.89140.95661.05421.0351
GMI 0.94830.93060.91150.93450.93340.96030.99461.00141.01831.013
AQI 1.01960.870.96450.99340.91391.01081.02641.04111.05471.1354
SGI 0.83110.77860.73820.80510.82970.9020.98060.98950.98940.9681
DEPI 0.84311.08821.28320.72520.95170.7230.63080.93240.96850.9898
SGAI 1.06331.08851.10591.09091.11261.09381.0631.04540.99320.9868
LVGI 0.95871.18550.97780.95451.01040.98240.96620.92650.89360.8791
TATA -0.2219-0.2258-0.0628-0.0793-0.0673-0.0652-0.0492-0.0319-0.001-0.0241
M-score -3.71-3.69-2.70-3.08-2.92-2.96-2.86-2.65-2.38-2.49
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