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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.
Epiq Systems Inc has a M-score of -3.02 suggests that the company is not a 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 * 0.8079||+||0.528 * 1.0085||+||0.404 * 0.9363||+||0.892 * 1.1647||+||0.115 * 1.2108|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.159||+||4.679 * -0.0941||-||0.327 * 1.1317|
|This Year (Jun14) TTM:||Last Year (Jun13) TTM:|
|Accounts Receivable was $138.1 Mil.|
Revenue was 125.056 + 123.271 + 129.437 + 115.684 = $493.4 Mil.
Gross Profit was 58.089 + 58.833 + 64.542 + 57.993 = $239.5 Mil.
Total Current Assets was $182.7 Mil.
Total Assets was $723.8 Mil.
Property, Plant and Equipment(Net PPE) was $72.2 Mil.
Depreciation, Depletion and Amortization(DDA) was $50.0 Mil.
Selling, General & Admin. Expense(SGA) was $170.2 Mil.
Total Current Liabilities was $58.9 Mil.
Long-Term Debt was $297.8 Mil.
Net Income was -3.419 + -2.298 + 0.096 + 4.235 = $-1.4 Mil.
Non Operating Income was 0 + 0 + 0 + 0 = $0.0 Mil.
Cash Flow from Operations was 19.601 + -0.831 + 24.006 + 23.961 = $66.7 Mil.
|Accounts Receivable was $146.8 Mil.
Revenue was 113.372 + 123.59 + 95.731 + 90.987 = $423.7 Mil.
Gross Profit was 55.772 + 51.552 + 50.28 + 49.75 = $207.4 Mil.
Total Current Assets was $160.5 Mil.
Total Assets was $690.9 Mil.
Property, Plant and Equipment(Net PPE) was $52.3 Mil.
Depreciation, Depletion and Amortization(DDA) was $51.3 Mil.
Selling, General & Admin. Expense(SGA) was $126.1 Mil.
Total Current Liabilities was $60.1 Mil.
Long-Term Debt was $240.8 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)|
|=||(138.117 / 493.448)||/||(146.791 / 423.68)|
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)|
|=||(58.833 / 423.68)||/||(58.089 / 493.448)|
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 - (182.692 + 72.225) / 723.786)||/||(1 - (160.543 + 52.332) / 690.899)|
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))|
|=||(51.307 / (51.307 + 52.332))||/||(49.954 / (49.954 + 72.225))|
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)|
|=||(170.236 / 493.448)||/||(126.114 / 423.68)|
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)|
|=||((297.833 + 58.857) / 723.786)||/||((240.796 + 60.071) / 690.899)|
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|
|=||(-1.386 - 0||-||66.737)||/||723.786|
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 -3.02 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