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Heartland Payment Systems Inc (NYSE:HPY)
Beneish M-Score
-2.83 (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 -2.83 suggests that the company is not a manipulator.

HPY' s Beneish M-Score Range Over the Past 10 Years
Min: -4.07   Max: -0.71
Current: -2.83

-4.07
-0.71

During the past 13 years, the highest Beneish M-Score of Heartland Payment Systems Inc was -0.71. The lowest was -4.07. And the median was -2.58.


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 * 1.0108+0.528 * 0.9274+0.404 * 1.0125+0.892 * 1.157+0.115 * 0.7828
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0951+4.679 * -0.0926-0.327 * 0.9615
=-2.83

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

This Year (Sep15) TTM:Last Year (Sep14) TTM:
Accounts Receivable was $258 Mil.
Revenue was 705.667 + 675.692 + 602.459 + 604.613 = $2,588 Mil.
Gross Profit was 101.73 + 95.3 + 87.886 + 86.094 = $371 Mil.
Total Current Assets was $527 Mil.
Total Assets was $1,453 Mil.
Property, Plant and Equipment(Net PPE) was $168 Mil.
Depreciation, Depletion and Amortization(DDA) was $61 Mil.
Selling, General & Admin. Expense(SGA) was $228 Mil.
Total Current Liabilities was $577 Mil.
Long-Term Debt was $450 Mil.
Net Income was 23.881 + 20.906 + 17.238 + -19.771 = $42 Mil.
Non Operating Income was -0.009 + -0.326 + 0.026 + -4.313 = $-5 Mil.
Cash Flow from Operations was 62.529 + 56.381 + 20.951 + 41.469 = $181 Mil.
Accounts Receivable was $221 Mil.
Revenue was 600.626 + 582.859 + 523.283 + 530.38 = $2,237 Mil.
Gross Profit was 79.792 + 73.305 + 70.848 + 73.447 = $297 Mil.
Total Current Assets was $486 Mil.
Total Assets was $1,337 Mil.
Property, Plant and Equipment(Net PPE) was $163 Mil.
Depreciation, Depletion and Amortization(DDA) was $43 Mil.
Selling, General & Admin. Expense(SGA) was $180 Mil.
Total Current Liabilities was $429 Mil.
Long-Term Debt was $554 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)
=(258.378 / 2588.431) / (220.936 / 2237.148)
=0.09982032 / 0.09875788
=1.0108

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)
=(95.3 / 2237.148) / (101.73 / 2588.431)
=0.13293354 / 0.14333393
=0.9274

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 - (527.055 + 168.244) / 1452.739) / (1 - (485.694 + 162.707) / 1336.764)
=0.52138753 / 0.51494729
=1.0125

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
=2588.431 / 2237.148
=1.157

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))
=(42.835 / (42.835 + 162.707)) / (61.037 / (61.037 + 168.244))
=0.20840023 / 0.26621046
=0.7828

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)
=(227.525 / 2588.431) / (179.567 / 2237.148)
=0.08790074 / 0.08026604
=1.0951

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)
=((450.041 + 576.648) / 1452.739) / ((553.75 + 428.765) / 1336.764)
=0.7067264 / 0.73499511
=0.9615

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
=(42.254 - -4.622 - 181.33) / 1452.739
=-0.0926

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 -2.83 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

Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15
DSRI 0.86970.95540.9720.99691.04590.93621.01211.04531.08121.0078
GMI 0.99640.94650.94971.00681.18970.77130.81960.88381.04620.9236
AQI 0.98830.97541.52440.80780.94181.07571.12530.98071.48291.0138
SGI 1.31411.19761.17591.06941.12331.06991.0141.06061.08241.1605
DEPI 0.96911.26121.08951.07761.00332.25331.05830.95090.81260.8692
SGAI 0.9631.0031.10271.30850.8541.17651.09731.16951.01431.1034
LVGI 0.77271.14711.28041.26340.89950.91921.21150.93231.21050.946
TATA 0.1313-0.1001-0.09750.02790.1264-0.1016-0.1284-0.0369-0.0423-0.0727
M-score -1.63-2.87-2.72-2.49-1.60-2.90-3.18-2.64-2.40-2.72

Heartland Payment Systems Inc Quarterly Data

Sep13Dec13Mar14Jun14Sep14Dec14Mar15Jun15Sep15Dec15
DSRI 0.98681.04530.84490.84841.06241.08121.07071.12741.01081.0078
GMI 0.8650.88380.94811.02041.04251.04621.00920.95460.92740.9236
AQI 1.06320.98070.99991.06961.46761.48291.57321.49731.01251.0138
SGI 1.06661.06061.05391.05541.06281.08241.10811.13211.1571.1605
DEPI -0.3670.95090.89030.89140.93420.81260.82270.79490.78280.8692
SGAI 1.20251.16951.05950.97940.9851.01431.07011.11761.09511.1034
LVGI 1.19330.93230.9650.9891.17211.21051.1571.120.96150.946
TATA -0.0981-0.0369-0.0579-0.0485-0.0067-0.0423-0.0428-0.0658-0.0926-0.0727
M-score -3.19-2.64-2.88-2.76-2.25-2.40-2.37-2.46-2.83-2.72
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