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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 Epiq Systems Inc was -1.50. The lowest was -4.76. 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 Epiq 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 * 1.0358||+||0.528 * 1.0276||+||0.404 * 1.0356||+||0.892 * 1.2158||+||0.115 * 0.9196|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9093||+||4.679 * -0.0975||-||0.327 * 1.1296|
* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.
|This Year (Mar16) TTM:||Last Year (Mar15) TTM:|
|Accounts Receivable was $163.5 Mil.|
Revenue was 146.531 + 144.632 + 142.535 + 138.01 = $571.7 Mil.
Gross Profit was 66.47 + 72.138 + 67.403 + 62.819 = $268.8 Mil.
Total Current Assets was $210.9 Mil.
Total Assets was $829.4 Mil.
Property, Plant and Equipment(Net PPE) was $72.8 Mil.
Depreciation, Depletion and Amortization(DDA) was $58.0 Mil.
Selling, General & Admin. Expense(SGA) was $179.0 Mil.
Total Current Liabilities was $73.2 Mil.
Long-Term Debt was $387.6 Mil.
Net Income was -0.065 + 8.75 + -19.18 + -3.241 = $-13.7 Mil.
Non Operating Income was 0 + 0 + 0 + 0 = $0.0 Mil.
Cash Flow from Operations was -10.341 + 34.51 + 18.865 + 24.107 = $67.1 Mil.
|Accounts Receivable was $129.8 Mil.
Revenue was 119.028 + 115.137 + 111.006 + 125.056 = $470.2 Mil.
Gross Profit was 57.495 + 55.653 + 55.986 + 58.089 = $227.2 Mil.
Total Current Assets was $196.5 Mil.
Total Assets was $731.2 Mil.
Property, Plant and Equipment(Net PPE) was $70.2 Mil.
Depreciation, Depletion and Amortization(DDA) was $48.3 Mil.
Selling, General & Admin. Expense(SGA) was $161.9 Mil.
Total Current Liabilities was $60.1 Mil.
Long-Term Debt was $299.6 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)|
|=||(163.464 / 571.708)||/||(129.801 / 470.227)|
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)|
|=||(227.223 / 470.227)||/||(268.83 / 571.708)|
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 - (210.937 + 72.846) / 829.424)||/||(1 - (196.494 + 70.217) / 731.224)|
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))|
|=||(48.327 / (48.327 + 70.217))||/||(58.015 / (58.015 + 72.846))|
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)|
|=||(179.03 / 571.708)||/||(161.941 / 470.227)|
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)|
|=||((387.578 + 73.244) / 829.424)||/||((299.568 + 60.089) / 731.224)|
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|
|=||(-13.736 - 0||-||67.141)||/||829.424|
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.
Epiq Systems Inc has a M-score of -2.72 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
Epiq Systems Inc Annual Data
Epiq Systems Inc Quarterly Data