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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 -1.54. The lowest was -4.70. And the median was -2.47.
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|
|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
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)|
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)|
|=||(58.089 / 448.377)||/||(55.986 / 488.77)|
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 - (181.399 + 67.536) / 715.176)||/||(1 - (189.666 + 67.375) / 736.69)|
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))|
|=||(50.701 / (50.701 + 67.375))||/||(49.878 / (49.878 + 67.536))|
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)|
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)|
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|
|=||(-0.611 - 0||-||61.37)||/||715.176|
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.
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