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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 -1.97. The lowest was -3.34. And the median was -2.46.
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 * 0.8251||+||0.528 * 0.9898||+||0.404 * 0.9976||+||0.892 * 0.9842||+||0.115 * 1.0005|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.1387||+||4.679 * -0.0963||-||0.327 * 0.984|
* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.
|This Year (Dec14) TTM:||Last Year (Dec13) TTM:|
|Accounts Receivable was $117.9 Mil.|
Revenue was 115.137 + 111.006 + 125.056 + 123.271 = $474.5 Mil.
Gross Profit was 55.653 + 55.986 + 58.089 + 58.833 = $228.6 Mil.
Total Current Assets was $199.1 Mil.
Total Assets was $738.3 Mil.
Property, Plant and Equipment(Net PPE) was $70.6 Mil.
Depreciation, Depletion and Amortization(DDA) was $48.7 Mil.
Selling, General & Admin. Expense(SGA) was $167.1 Mil.
Total Current Liabilities was $64.4 Mil.
Long-Term Debt was $302.5 Mil.
Net Income was -0.63 + 5.01 + -3.419 + -2.298 = $-1.3 Mil.
Non Operating Income was 0 + 0 + 0 + 0 = $0.0 Mil.
Cash Flow from Operations was 32.358 + 18.594 + 19.601 + -0.831 = $69.7 Mil.
|Accounts Receivable was $145.1 Mil.
Revenue was 129.437 + 115.684 + 113.372 + 123.59 = $482.1 Mil.
Gross Profit was 64.542 + 57.993 + 55.772 + 51.552 = $229.9 Mil.
Total Current Assets was $200.0 Mil.
Total Assets was $747.8 Mil.
Property, Plant and Equipment(Net PPE) was $72.1 Mil.
Depreciation, Depletion and Amortization(DDA) was $49.8 Mil.
Selling, General & Admin. Expense(SGA) was $149.1 Mil.
Total Current Liabilities was $78.6 Mil.
Long-Term Debt was $299.1 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)|
|=||(117.854 / 474.47)||/||(145.134 / 482.083)|
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)|
|=||(55.986 / 482.083)||/||(55.653 / 474.47)|
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 - (199.147 + 70.579) / 738.252)||/||(1 - (199.969 + 72.118) / 747.781)|
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))|
|=||(49.805 / (49.805 + 72.118))||/||(48.697 / (48.697 + 70.579))|
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)|
|=||(167.053 / 474.47)||/||(149.063 / 482.083)|
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)|
|=||((302.522 + 64.354) / 738.252)||/||((299.108 + 78.564) / 747.781)|
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|
|=||(-1.337 - 0||-||69.722)||/||738.252|
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 -3.13 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