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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 Harbinger Group Inc was 537.50. The lowest was -3.71. And the median was -2.56.
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 Harbinger Group 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 * 0.8587||+||0.528 * 0.9995||+||0.404 * 1.0394||+||0.892 * 1.0757||+||0.115 * 1.0619|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.1608||+||4.679 * -0.0194||-||0.327 * 0.9714|
|This Year (Sep14) TTM:||Last Year (Sep13) TTM:|
|Accounts Receivable was $460 Mil.|
Revenue was 1512.4 + 1599.4 + 1341.2 + 1510 = $5,963 Mil.
Gross Profit was 714.5 + 866.8 + 662 + 774.5 = $3,018 Mil.
Total Current Assets was $2,724 Mil.
Total Assets was $30,100 Mil.
Property, Plant and Equipment(Net PPE) was $909 Mil.
Depreciation, Depletion and Amortization(DDA) was $303 Mil.
Selling, General & Admin. Expense(SGA) was $2,188 Mil.
Total Current Liabilities was $1,033 Mil.
Long-Term Debt was $5,158 Mil.
Net Income was -6.3 + 98.3 + -75.5 + -26.8 = $-10 Mil.
Non Operating Income was -11.7 + 44 + -8.1 + -58.6 = $-34 Mil.
Cash Flow from Operations was 443.5 + 246.3 + 7.5 + -89.4 = $608 Mil.
|Accounts Receivable was $498 Mil.
Revenue was 1500.8 + 1409.2 + 1411.1 + 1222.3 = $5,543 Mil.
Gross Profit was 742.4 + 684.1 + 737.4 + 640.2 = $2,804 Mil.
Total Current Assets was $3,305 Mil.
Total Assets was $27,909 Mil.
Property, Plant and Equipment(Net PPE) was $993 Mil.
Depreciation, Depletion and Amortization(DDA) was $359 Mil.
Selling, General & Admin. Expense(SGA) was $1,752 Mil.
Total Current Liabilities was $1,013 Mil.
Long-Term Debt was $4,896 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)|
|=||(460 / 5963)||/||(498 / 5543.4)|
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)|
|=||(866.8 / 5543.4)||/||(714.5 / 5963)|
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 - (2724.4 + 908.6) / 30100.2)||/||(1 - (3305.1 + 993.3) / 27908.8)|
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))|
|=||(358.7 / (358.7 + 993.3))||/||(302.6 / (302.6 + 908.6))|
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)|
|=||(2188.1 / 5963)||/||(1752.3 / 5543.4)|
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)|
|=||((5157.8 + 1033) / 30100.2)||/||((4896.1 + 1012.7) / 27908.8)|
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|
|=||(-10.3 - -34.4||-||607.9)||/||30100.2|
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.
Harbinger Group Inc has a M-score of -2.63 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
Harbinger Group Inc Annual Data
Harbinger Group Inc Quarterly Data