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Heartland Payment Systems Inc (NYSE:HPY)
Beneish M-Score
-2.81 (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 -2.81 suggests that the company is not a manipulator.

HPY' s 10-Year Beneish M-Score Range
Min: -4.07   Max: 0.01
Current: -2.81

-4.07
0.01

During the past 13 years, the highest Beneish M-Score of Heartland Payment Systems Inc was 0.01. The lowest was -4.07. And the median was -2.79.


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 * 0.8484+0.528 * 1.0204+0.404 * 1.0696+0.892 * 1.0554+0.115 * 0.5132
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9794+4.679 * -0.0485-0.327 * 0.989
=-2.81

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

This Year (Jun14) TTM:Last Year (Jun13) TTM:
Accounts Receivable was $213 Mil.
Revenue was 582.859 + 523.283 + 530.38 + 557.129 = $2,194 Mil.
Gross Profit was 73.305 + 70.848 + 73.447 + 76.743 = $294 Mil.
Total Current Assets was $456 Mil.
Total Assets was $934 Mil.
Property, Plant and Equipment(Net PPE) was $156 Mil.
Depreciation, Depletion and Amortization(DDA) was $86 Mil.
Selling, General & Admin. Expense(SGA) was $172 Mil.
Total Current Liabilities was $410 Mil.
Long-Term Debt was $200 Mil.
Net Income was 17.452 + 15.74 + 17.405 + 21.981 = $73 Mil.
Non Operating Income was 0.42 + -0.132 + -0.171 + 0.09 = $0 Mil.
Cash Flow from Operations was 19.016 + 15.206 + 24.722 + 58.71 = $118 Mil.
Accounts Receivable was $237 Mil.
Revenue was 546.624 + 501.239 + 499.965 + 530.677 = $2,079 Mil.
Gross Profit was 76.861 + 72.615 + 65.5 + 69.593 = $285 Mil.
Total Current Assets was $441 Mil.
Total Assets was $849 Mil.
Property, Plant and Equipment(Net PPE) was $134 Mil.
Depreciation, Depletion and Amortization(DDA) was $30 Mil.
Selling, General & Admin. Expense(SGA) was $166 Mil.
Total Current Liabilities was $521 Mil.
Long-Term Debt was $40 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)
=(212.559 / 2193.651) / (237.379 / 2078.505)
=0.09689736 / 0.11420661
=0.8484

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)
=(70.848 / 2078.505) / (73.305 / 2193.651)
=0.13691042 / 0.1341795
=1.0204

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 - (455.711 + 155.77) / 933.96) / (1 - (441.353 + 133.746) / 849.249)
=0.34528138 / 0.32281463
=1.0696

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
=2193.651 / 2078.505
=1.0554

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))
=(29.767 / (29.767 + 133.746)) / (85.623 / (85.623 + 155.77))
=0.18204669 / 0.35470374
=0.5132

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)
=(172.057 / 2193.651) / (166.447 / 2078.505)
=0.07843408 / 0.08008015
=0.9794

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)
=((200 + 409.939) / 933.96) / ((40 + 520.79) / 849.249)
=0.65306758 / 0.66033637
=0.989

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
=(72.578 - 0.207 - 117.654) / 933.96
=-0.0485

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 -2.81 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 1.05250.86970.95540.9720.99691.04590.93621.01211.0453
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 1.06820.96911.26121.08951.07761.00331.11222.14410.519
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 -0.92-1.63-2.87-2.72-2.49-1.60-3.03-3.06-2.69

Heartland Payment Systems Inc Quarterly Data

Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14
DSRI 0.98390.93161.08661.01211.19561.25230.98681.04530.84490.8484
GMI 0.78720.78460.77930.81960.8140.81690.8650.88380.94811.0204
AQI 1.08551.18861.01541.12531.06590.97011.06320.98070.99991.0696
SGI 1.03831.00630.98911.0141.0311.05251.06661.06061.05391.0554
DEPI 1.22221.38341.64732.14411.50241.64121.25010.5190.72220.5132
SGAI 1.19171.18731.17681.09731.17541.2241.20251.16951.05950.9794
LVGI 0.91670.98120.96741.21151.23651.20331.19330.93230.9650.989
TATA -0.0779-0.0683-0.1039-0.1284-0.0848-0.0921-0.0981-0.0369-0.0579-0.0485
M-score -2.88-2.88-2.95-3.06-2.79-2.77-3.01-2.69-2.90-2.81
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