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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.
Heartland Payment Systems Inc has a M-score of -2.70 suggests that the company is not a manipulator.
During the past 13 years, the highest Beneish M-Score of Heartland Payment Systems Inc was -0.23. The lowest was -3.91. And the median was -2.75.
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 Heartland Payment Systems 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 * 0.9194||+||0.528 * 1.0204||+||0.404 * 1.0696||+||0.892 * 1.0554||+||0.115 * 0.8914|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9794||+||4.679 * -0.0485||-||0.327 * 0.989|
|This Year (Jun14) TTM:||Last Year (Jun13) TTM:|
|Accounts Receivable was $230 Mil.|
Revenue was 582.859 + 523.283 + 530.38 + 557.129 = $2,194 Mil.
Gross Profit was 73.305 + 70.848 + 73.447 + 76.743 = $294 Mil.
Total Current Assets was $456 Mil.
Total Assets was $934 Mil.
Property, Plant and Equipment(Net PPE) was $156 Mil.
Depreciation, Depletion and Amortization(DDA) was $40 Mil.
Selling, General & Admin. Expense(SGA) was $172 Mil.
Total Current Liabilities was $410 Mil.
Long-Term Debt was $200 Mil.
Net Income was 17.452 + 15.74 + 17.405 + 21.981 = $73 Mil.
Non Operating Income was 0.42 + -0.132 + -0.171 + 0.09 = $0 Mil.
Cash Flow from Operations was 19.016 + 15.206 + 24.722 + 58.71 = $118 Mil.
|Accounts Receivable was $237 Mil.
Revenue was 546.624 + 501.239 + 499.965 + 530.677 = $2,079 Mil.
Gross Profit was 76.861 + 72.615 + 65.5 + 69.593 = $285 Mil.
Total Current Assets was $441 Mil.
Total Assets was $849 Mil.
Property, Plant and Equipment(Net PPE) was $134 Mil.
Depreciation, Depletion and Amortization(DDA) was $30 Mil.
Selling, General & Admin. Expense(SGA) was $166 Mil.
Total Current Liabilities was $521 Mil.
Long-Term Debt was $40 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)|
|=||(230.348 / 2193.651)||/||(237.379 / 2078.505)|
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)|
|=||(70.848 / 2078.505)||/||(73.305 / 2193.651)|
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 - (455.711 + 155.77) / 933.96)||/||(1 - (441.353 + 133.746) / 849.249)|
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))|
|=||(29.767 / (29.767 + 133.746))||/||(39.975 / (39.975 + 155.77))|
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)|
|=||(172.057 / 2193.651)||/||(166.447 / 2078.505)|
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)|
|=||((200 + 409.939) / 933.96)||/||((40 + 520.79) / 849.249)|
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|
|=||(72.578 - 0.207||-||117.654)||/||933.96|
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.
Heartland Payment Systems Inc has a M-score of -2.70 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
Heartland Payment Systems Inc Annual Data
Heartland Payment Systems Inc Quarterly Data