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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.
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 -2.64.
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 * 1.0812||+||0.528 * 1.0462||+||0.404 * 1.4829||+||0.892 * 1.0824||+||0.115 * 0.8126|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0143||+||4.679 * -0.0423||-||0.327 * 1.2105|
|This Year (Dec14) TTM:||Last Year (Dec13) TTM:|
|Accounts Receivable was $234 Mil.|
Revenue was 604.613 + 600.626 + 582.859 + 523.283 = $2,311 Mil.
Gross Profit was 86.094 + 79.792 + 73.305 + 70.848 = $310 Mil.
Total Current Assets was $541 Mil.
Total Assets was $1,388 Mil.
Property, Plant and Equipment(Net PPE) was $154 Mil.
Depreciation, Depletion and Amortization(DDA) was $48 Mil.
Selling, General & Admin. Expense(SGA) was $191 Mil.
Total Current Liabilities was $525 Mil.
Long-Term Debt was $523 Mil.
Net Income was -19.771 + 20.458 + 17.452 + 15.74 = $34 Mil.
Non Operating Income was -4.313 + 3.581 + 0.42 + -0.132 = $-0 Mil.
Cash Flow from Operations was 41.469 + 17.306 + 19.016 + 15.206 = $93 Mil.
|Accounts Receivable was $200 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.
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)|
|=||(234.104 / 2311.381)||/||(200.04 / 2135.372)|
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)|
|=||(79.792 / 2135.372)||/||(86.094 / 2311.381)|
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 - (540.591 + 154.303) / 1387.773)||/||(1 - (449.793 + 147.388) / 900.305)|
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))|
|=||(35.389 / (35.389 + 147.388))||/||(48.27 / (48.27 + 154.303))|
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)|
|=||(190.554 / 2311.381)||/||(173.568 / 2135.372)|
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)|
|=||((523.122 + 525.448) / 1387.773)||/||((150 + 411.973) / 900.305)|
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|
|=||(33.879 - -0.444||-||92.997)||/||1387.773|
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 -2.40 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