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Heartland Payment Systems, Inc. (NYSE:HPY)
Beneish M-Score
-2.59 (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 -2.59 suggests that the company is not a manipulator.

HPY' s 10-Year Beneish M-Score Range
Min: -3.98   Max: -1.01
Current: -2.59

-3.98
-1.01

During the past 13 years, the highest Beneish M-Score of Heartland Payment Systems, Inc. was -1.01. The lowest was -3.98. And the median was -2.74.


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 * 1.0998+0.528 * 0.8838+0.404 * 0.9807+0.892 * 1.0606+0.115 * 0.9509
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.1695+4.679 * -0.0369-0.327 * 0.9323
=-2.59

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

This Year (Dec13) TTM:Last Year (Dec12) TTM:
Accounts Receivable was $210 Mil.
Revenue was 530.38 + 557.129 + 546.624 + 501.239 = $2,135 Mil.
Gross Profit was 73.447 + 76.743 + 76.861 + 72.615 = $300 Mil.
Total Current Assets was $450 Mil.
Total Assets was $900 Mil.
Property, Plant and Equipment(Net PPE) was $147 Mil.
Depreciation, Depletion and Amortization(DDA) was $35 Mil.
Selling, General & Admin. Expense(SGA) was $174 Mil.
Total Current Liabilities was $412 Mil.
Long-Term Debt was $150 Mil.
Net Income was 17.405 + 21.981 + 19.681 + 19.559 = $79 Mil.
Non Operating Income was -0.171 + 0.09 + -0.07 + -0.09 = $-0 Mil.
Cash Flow from Operations was 24.722 + 58.71 + 30.414 + -1.72 = $112 Mil.
Accounts Receivable was $180 Mil.
Revenue was 499.965 + 530.677 + 515.218 + 467.576 = $2,013 Mil.
Gross Profit was 65.5 + 69.593 + 60.298 + 54.344 = $250 Mil.
Total Current Assets was $409 Mil.
Total Assets was $813 Mil.
Property, Plant and Equipment(Net PPE) was $125 Mil.
Depreciation, Depletion and Amortization(DDA) was $28 Mil.
Selling, General & Admin. Expense(SGA) was $140 Mil.
Total Current Liabilities was $495 Mil.
Long-Term Debt was $50 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)
=(210.466 / 2135.372) / (180.448 / 2013.436)
=0.09856175 / 0.08962192
=1.0998

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)
=(76.743 / 2013.436) / (73.447 / 2135.372)
=0.12403424 / 0.14033433
=0.8838

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 - (449.793 + 147.388) / 900.305) / (1 - (409.126 + 125.031) / 813.414)
=0.33669034 / 0.34331472
=0.9807

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
=2135.372 / 2013.436
=1.0606

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))
=(28.213 / (28.213 + 125.031)) / (35.389 / (35.389 + 147.388))
=0.18410509 / 0.19361845
=0.9509

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)
=(173.568 / 2135.372) / (139.934 / 2013.436)
=0.08128232 / 0.0695001
=1.1695

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)
=((150 + 411.973) / 900.305) / ((50 + 494.62) / 813.414)
=0.62420291 / 0.66954835
=0.9323

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
=(78.626 - -0.241 - 112.126) / 900.305
=-0.0369

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 -2.59 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

Sep11Dec11Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13
DSRI 0.9110.93620.98390.93161.08661.01211.19561.25231.01491.0998
GMI 0.86560.77130.78720.78460.77930.81960.8140.81690.8650.8838
AQI 1.15311.07571.08551.18861.01541.12531.06590.97011.06320.9807
SGI 1.10471.06991.03831.00630.98911.0141.0311.05251.06661.0606
DEPI 1.10481.11221.22221.38341.64732.14411.96481.64121.25010.9509
SGAI 1.00421.17651.19171.18731.17681.09731.17541.2241.20251.1695
LVGI 0.89440.91920.91670.98120.96741.21151.23651.20331.19330.9323
TATA -0.0054-0.1016-0.0779-0.0683-0.1039-0.1284-0.0848-0.0921-0.0981-0.0369
M-score -2.46-3.03-2.88-2.88-2.95-3.06-2.74-2.77-2.98-2.59
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