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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 -0.71. The lowest was -4.07. 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 * 1.0624||+||0.528 * 1.0425||+||0.404 * 1.4676||+||0.892 * 1.0628||+||0.115 * 0.9342|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.985||+||4.679 * -0.0067||-||0.327 * 1.1721|
|This Year (Sep14) TTM:||Last Year (Sep13) TTM:|
|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.
Net Income was 20.458 + 17.452 + 15.74 + 17.405 = $71 Mil.
Non Operating Income was 3.581 + 0.42 + -0.132 + -0.171 = $4 Mil.
Cash Flow from Operations was 17.306 + 19.016 + 15.206 + 24.722 = $76 Mil.
|Accounts Receivable was $196 Mil.
Revenue was 557.129 + 546.624 + 501.239 + 499.965 = $2,105 Mil.
Gross Profit was 76.743 + 76.861 + 72.615 + 65.5 = $292 Mil.
Total Current Assets was $419 Mil.
Total Assets was $859 Mil.
Property, Plant and Equipment(Net PPE) was $139 Mil.
Depreciation, Depletion and Amortization(DDA) was $34 Mil.
Selling, General & Admin. Expense(SGA) was $172 Mil.
Total Current Liabilities was $504 Mil.
Long-Term Debt was $35 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)|
|=||(220.936 / 2237.148)||/||(195.678 / 2104.957)|
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)|
|=||(73.305 / 2104.957)||/||(79.792 / 2237.148)|
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 - (485.694 + 162.707) / 1336.764)||/||(1 - (418.574 + 139.16) / 859.213)|
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))|
|=||(33.642 / (33.642 + 139.16))||/||(42.835 / (42.835 + 162.707))|
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)|
|=||(179.567 / 2237.148)||/||(171.531 / 2104.957)|
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)|
|=||((553.75 + 428.765) / 1336.764)||/||((35 + 503.794) / 859.213)|
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|
|=||(71.055 - 3.698||-||76.25)||/||1336.764|
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 -2.25 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