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Epiq Systems Inc (NAS:EPIQ)
Beneish M-Score
-3.13 (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 -3.13 suggests that the company is not a manipulator.

EPIQ' s 10-Year Beneish M-Score Range
Min: -3.34   Max: -1.97
Current: -3.13

-3.34
-1.97

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.


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 * 0.8251+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
=-3.13

* 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

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)
=(117.854 / 474.47) / (145.134 / 482.083)
=0.24839084 / 0.30105604
=0.8251

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)
=(55.986 / 482.083) / (55.653 / 474.47)
=0.47680379 / 0.48171855
=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 - (199.147 + 70.579) / 738.252) / (1 - (199.969 + 72.118) / 747.781)
=0.63464237 / 0.6361408
=0.9976

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
=474.47 / 482.083
=0.9842

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))
=0.40849553 / 0.40827157
=1.0005

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)
=0.35208338 / 0.30920609
=1.1387

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)
=0.49695226 / 0.50505696
=0.984

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
=(-1.337 - 0 - 69.722) / 738.252
=-0.0963

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.


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

Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14
DSRI 1.65840.46811.31871.05690.88451.33371.30430.87631.08610.8251
GMI 0.84590.69461.0751.17880.9290.94210.98421.12311.12450.9898
AQI 0.99911.09930.94160.92930.94211.10641.02010.97280.85070.9976
SGI 1.08092.10820.7781.35381.01251.03391.14631.31681.29220.9842
DEPI 1.17960.77951.22751.050.98140.94730.85740.88891.34121.0005
SGAI 1.11050.82541.48670.83981.08941.05610.9960.90890.98571.1387
LVGI 1.59140.7540.45931.0180.85641.39021.77280.90341.25140.984
TATA -0.05830.0365-0.0443-0.0487-0.085-0.0429-0.0569-0.0784-0.0287-0.0963
M-score -2.35-1.85-2.46-2.25-3.00-2.47-2.60-2.59-2.31-3.13

Epiq Systems Inc Quarterly Data

Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14Dec14
DSRI 0.98340.87630.95361.18181.06661.08611.0250.80790.84320.8251
GMI 1.07931.12311.2151.15361.15161.12450.99911.00850.98980.9898
AQI 0.98890.97280.95410.91770.86660.85070.89650.93631.00130.9976
SGI 1.26591.31681.30761.26051.27751.29221.18021.16471.09010.9842
DEPI 0.940.88891.00751.06151.25641.34121.30581.21081.01081.0005
SGAI 0.94120.90890.81250.89590.93630.98581.16051.15921.16431.1387
LVGI 1.13370.90340.94850.99441.19751.25141.15711.13170.97750.984
TATA -0.0691-0.0784-0.04360.0032-0.0336-0.0287-0.0446-0.0941-0.0867-0.0963
M-score -2.58-2.59-2.31-1.99-2.33-2.31-2.59-3.02-2.97-3.13
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