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Epiq Systems Inc (NAS:EPIQ)
Beneish M-Score
-2.97 (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.

Epiq Systems Inc has a M-score of -2.97 suggests that the company is not a manipulator.

EPIQ' s 10-Year Beneish M-Score Range
Min: -4.7   Max: -1.54
Current: -2.97

-4.7
-1.54

During the past 13 years, the highest Beneish M-Score of Epiq Systems Inc was -1.54. The lowest was -4.70. And the median was -2.47.


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 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 * 0.8432+0.528 * 0.9898+0.404 * 1.0013+0.892 * 1.0901+0.115 * 1.0108
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.1643+4.679 * -0.0867-0.327 * 0.9775
=-2.97

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

This Year (Sep14) TTM:Last Year (Sep13) TTM:
Accounts Receivable was $130.9 Mil.
Revenue was 111.006 + 125.056 + 123.271 + 129.437 = $488.8 Mil.
Gross Profit was 55.986 + 58.089 + 58.833 + 64.542 = $237.5 Mil.
Total Current Assets was $181.4 Mil.
Total Assets was $715.2 Mil.
Property, Plant and Equipment(Net PPE) was $67.5 Mil.
Depreciation, Depletion and Amortization(DDA) was $49.9 Mil.
Selling, General & Admin. Expense(SGA) was $170.4 Mil.
Total Current Liabilities was $50.8 Mil.
Long-Term Debt was $294.5 Mil.
Net Income was 5.01 + -3.419 + -2.298 + 0.096 = $-0.6 Mil.
Non Operating Income was 0 + 0 + 0 + 0 = $0.0 Mil.
Cash Flow from Operations was 18.594 + 19.601 + -0.831 + 24.006 = $61.4 Mil.
Accounts Receivable was $142.4 Mil.
Revenue was 115.684 + 113.372 + 123.59 + 95.731 = $448.4 Mil.
Gross Profit was 57.993 + 55.772 + 51.552 + 50.28 = $215.6 Mil.
Total Current Assets was $189.7 Mil.
Total Assets was $736.7 Mil.
Property, Plant and Equipment(Net PPE) was $67.4 Mil.
Depreciation, Depletion and Amortization(DDA) was $50.7 Mil.
Selling, General & Admin. Expense(SGA) was $134.3 Mil.
Total Current Liabilities was $57.4 Mil.
Long-Term Debt was $306.4 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)
=(130.85 / 488.77) / (142.352 / 448.377)
=0.26771283 / 0.31748283
=0.8432

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)
=(58.089 / 448.377) / (55.986 / 488.77)
=0.48083867 / 0.48581132
=0.9898

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 - (181.399 + 67.536) / 715.176) / (1 - (189.666 + 67.375) / 736.69)
=0.65192484 / 0.65108662
=1.0013

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
=488.77 / 448.377
=1.0901

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))
=(50.701 / (50.701 + 67.375)) / (49.878 / (49.878 + 67.536))
=0.42939293 / 0.42480454
=1.0108

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)
=(170.435 / 488.77) / (134.281 / 448.377)
=0.34870184 / 0.29948236
=1.1643

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)
=((294.472 + 50.827) / 715.176) / ((306.423 + 57.448) / 736.69)
=0.48281682 / 0.49392689
=0.9775

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
=(-0.611 - 0 - 61.37) / 715.176
=-0.0867

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 -2.97 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.

Epiq Systems Inc Annual Data

Dec04Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13
DSRI 1.13861.65840.46811.31871.05690.88451.33371.30430.87631.0861
GMI 1.81680.84590.69461.0751.17880.9290.94210.98421.12311.1245
AQI 1.28060.99911.09930.94160.92930.94211.10641.02010.97280.8507
SGI 1.4481.08092.10820.7781.35381.01251.03391.14631.31681.2922
DEPI 0.96791.17960.77951.22751.050.98140.94730.85740.88891.3412
SGAI 1.05991.11050.82541.48670.83981.08941.05610.9960.90890.9857
LVGI 5.00081.59140.7540.45931.0180.85641.39021.77280.90341.2514
TATA -0.155-0.05830.0365-0.0443-0.0487-0.085-0.0429-0.0569-0.0784-0.0287
M-score -3.46-2.35-1.85-2.46-2.25-3.00-2.47-2.60-2.59-2.31

Epiq Systems Inc Quarterly Data

Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14
DSRI 0.90870.98340.87630.95361.18181.06661.08611.0250.80790.8432
GMI 1.06121.07931.12311.2151.15361.15161.12450.99911.00850.9898
AQI 0.99470.98890.97280.95410.91770.86660.85070.89650.93631.0013
SGI 1.29561.26591.31681.30761.26051.27751.29221.18021.16471.0901
DEPI 0.89610.940.88891.00751.06151.25641.34121.30581.21081.0108
SGAI 0.98060.94120.90890.81250.89590.93630.98581.16051.15921.1643
LVGI 1.15941.13370.90340.94850.99441.19751.25141.15711.13170.9775
TATA -0.0991-0.0691-0.0784-0.04360.0032-0.0336-0.0287-0.0446-0.0941-0.0867
M-score -2.79-2.58-2.59-2.31-1.99-2.33-2.31-2.59-3.02-2.97
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