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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.
Harte-Hanks Inc has a M-score of -2.94 suggests that the company is not a manipulator.
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 -2.68.
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 * 0.8886||+||0.528 * 0.9961||+||0.404 * 1.0108||+||0.892 * 0.9796||+||0.115 * 0.723|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.054||+||4.679 * -0.0652||-||0.327 * 0.9824|
|This Year (Mar14) TTM:||Last Year (Mar13) TTM:|
|Accounts Receivable was $110.2 Mil.|
Revenue was 132.727 + 152.179 + 134.973 + 188.256 = $608.1 Mil.
Gross Profit was 92.451 + 109.45 + 95.658 + 118.159 = $415.7 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 $356.9 Mil.
Total Current Liabilities was $131.5 Mil.
Long-Term Debt was $78.1 Mil.
Net Income was 1.845 + 6.566 + -8.173 + 8.309 = $8.5 Mil.
Non Operating Income was -0.734 + -0.646 + -0.536 + -0.083 = $-2.0 Mil.
Cash Flow from Operations was 6.692 + 24.825 + 3.126 + 19.523 = $54.2 Mil.
|Accounts Receivable was $126.6 Mil.
Revenue was 132.352 + 157.848 + 140.993 + 189.629 = $620.8 Mil.
Gross Profit was 93.367 + 109.992 + 98.493 + 120.903 = $422.8 Mil.
Total Current Assets was $222.4 Mil.
Total Assets was $699.0 Mil.
Property, Plant and Equipment(Net PPE) was $57.6 Mil.
Depreciation, Depletion and Amortization(DDA) was $14.8 Mil.
Selling, General & Admin. Expense(SGA) was $345.6 Mil.
Total Current Liabilities was $128.0 Mil.
Long-Term Debt was $94.9 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)|
|=||(110.178 / 608.135)||/||(126.579 / 620.822)|
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)|
|=||(109.45 / 620.822)||/||(92.451 / 608.135)|
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 - (224.217 + 39.429) / 668.892)||/||(1 - (222.398 + 57.646) / 698.981)|
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))|
|=||(14.783 / (14.783 + 57.646))||/||(15.509 / (15.509 + 39.429))|
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)|
|=||(356.859 / 608.135)||/||(345.639 / 620.822)|
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)|
|=||((78.094 + 131.469) / 668.892)||/||((94.938 + 127.971) / 698.981)|
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|
|=||(8.547 - -1.999||-||54.166)||/||668.892|
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 -2.94 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