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Heartland Payment Systems Inc (NYSE:HPY)
Beneish M-Score
-2.86 (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.

Heartland Payment Systems Inc has a M-score of -2.86 suggests that the company is not a manipulator.

HPY' s 10-Year Beneish M-Score Range
Min: -3.91   Max: -0.23
Current: -2.86

-3.91
-0.23

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 -2.76.


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 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 * 0.8736+0.528 * 0.9481+0.404 * 0.9999+0.892 * 1.0539+0.115 * 0.8903
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0595+4.679 * -0.0579-0.327 * 0.965
=-2.86

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

This Year (Mar14) TTM:Last Year (Mar13) TTM:
Accounts Receivable was $209 Mil.
Revenue was 523.283 + 530.38 + 557.129 + 546.624 = $2,157 Mil.
Gross Profit was 70.848 + 73.447 + 76.743 + 76.861 = $298 Mil.
Total Current Assets was $476 Mil.
Total Assets was $931 Mil.
Property, Plant and Equipment(Net PPE) was $152 Mil.
Depreciation, Depletion and Amortization(DDA) was $38 Mil.
Selling, General & Admin. Expense(SGA) was $172 Mil.
Total Current Liabilities was $426 Mil.
Long-Term Debt was $180 Mil.
Net Income was 15.74 + 17.405 + 21.981 + 19.681 = $75 Mil.
Non Operating Income was -0.132 + -0.171 + 0.09 + -0.07 = $-0 Mil.
Cash Flow from Operations was 15.206 + 24.722 + 58.71 + 30.414 = $129 Mil.
Accounts Receivable was $226 Mil.
Revenue was 501.239 + 499.965 + 530.677 + 515.218 = $2,047 Mil.
Gross Profit was 72.615 + 65.5 + 69.593 + 60.298 = $268 Mil.
Total Current Assets was $442 Mil.
Total Assets was $847 Mil.
Property, Plant and Equipment(Net PPE) was $129 Mil.
Depreciation, Depletion and Amortization(DDA) was $28 Mil.
Selling, General & Admin. Expense(SGA) was $154 Mil.
Total Current Liabilities was $526 Mil.
Long-Term Debt was $45 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)
=(208.525 / 2157.416) / (226.485 / 2047.099)
=0.09665498 / 0.11063705
=0.8736

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)
=(73.447 / 2047.099) / (70.848 / 2157.416)
=0.1309199 / 0.13808139
=0.9481

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 - (475.757 + 151.803) / 931.284) / (1 - (441.565 + 129.167) / 846.998)
=0.32613467 / 0.32617078
=0.9999

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
=2157.416 / 2047.099
=1.0539

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))
=(28.044 / (28.044 + 129.167)) / (38.039 / (38.039 + 151.803))
=0.17838446 / 0.20037189
=0.8903

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)
=(172.214 / 2157.416) / (154.225 / 2047.099)
=0.0798242 / 0.07533832
=1.0595

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)
=((180 + 425.977) / 931.284) / ((45 + 526.136) / 846.998)
=0.6506898 / 0.6743062
=0.965

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
=(74.807 - -0.283 - 129.052) / 931.284
=-0.0579

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 -2.86 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.

Heartland Payment Systems Inc Annual Data

Dec04Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13
DSRI 1.05250.86970.95540.9720.99691.04590.93621.01211.0998
GMI 0.9410.99640.94650.94971.00681.18970.77130.81960.8838
AQI 0.86610.98830.97541.52440.80780.94181.07571.12530.9807
SGI 1.38481.31411.19761.17591.06941.12331.06991.0141.0606
DEPI 1.06820.96911.26121.08951.07761.00331.11222.14410.9509
SGAI 0.86560.9631.0031.10271.30850.8541.17651.09731.1695
LVGI 0.57520.77271.14711.28041.26340.89950.91921.21150.9323
TATA 0.23210.1313-0.1001-0.09750.02790.1264-0.1016-0.1284-0.0369
M-score -0.92-1.63-2.87-2.72-2.49-1.60-3.03-3.06-2.59

Heartland Payment Systems Inc Quarterly Data

Dec11Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14
DSRI 0.93620.98390.93161.08661.01211.19561.25231.01491.09980.8736
GMI 0.77130.78720.78460.77930.81960.8140.81690.8650.88380.9481
AQI 1.07571.08551.18861.01541.12531.06590.97011.06320.98070.9999
SGI 1.06991.03831.00630.98911.0141.0311.05251.06661.06061.0539
DEPI 1.11221.22221.38341.64732.14411.96481.64121.25010.95090.8903
SGAI 1.17651.19171.18731.17681.09731.17541.2241.20251.16951.0595
LVGI 0.91920.91670.98120.96741.21151.23651.20331.19330.93230.965
TATA -0.1016-0.0779-0.0683-0.1039-0.1284-0.0848-0.0921-0.0981-0.0369-0.0579
M-score -3.03-2.88-2.88-2.95-3.06-2.74-2.77-2.98-2.59-2.86
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