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Epiq Systems Inc (NAS:EPIQ)
Beneish M-Score
-2.84 (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 -2.84 suggests that the company is not a manipulator.

EPIQ' s Beneish M-Score Range Over the Past 10 Years
Min: -3.34   Max: -1.97
Current: -2.84

-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 -2.47.


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 * 1.0401+0.528 * 1.0088+0.404 * 1.0483+0.892 * 1.147+0.115 * 0.9733
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.8891+4.679 * -0.1132-0.327 * 1.1299
=-2.84

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

This Year (Dec15) TTM:Last Year (Dec14) TTM:
Accounts Receivable was $140.6 Mil.
Revenue was 144.632 + 142.535 + 138.01 + 119.028 = $544.2 Mil.
Gross Profit was 72.138 + 67.403 + 62.819 + 57.495 = $259.9 Mil.
Total Current Assets was $197.0 Mil.
Total Assets was $823.9 Mil.
Property, Plant and Equipment(Net PPE) was $77.7 Mil.
Depreciation, Depletion and Amortization(DDA) was $56.2 Mil.
Selling, General & Admin. Expense(SGA) was $170.4 Mil.
Total Current Liabilities was $84.9 Mil.
Long-Term Debt was $12.5 Mil.
Net Income was 8.75 + -19.18 + -3.241 + 1.733 = $-11.9 Mil.
Non Operating Income was 0 + 0 + 0 + 0 = $0.0 Mil.
Cash Flow from Operations was 34.51 + 18.865 + 24.107 + 3.824 = $81.3 Mil.
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 $194.5 Mil.
Total Assets was $727.9 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 $11.8 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)
=(140.597 / 544.205) / (117.854 / 474.47)
=0.25835301 / 0.24839084
=1.0401

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)
=(67.403 / 474.47) / (72.138 / 544.205)
=0.48171855 / 0.47749469
=1.0088

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 - (197.043 + 77.715) / 823.897) / (1 - (194.522 + 70.579) / 727.924)
=0.66651414 / 0.63581226
=1.0483

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
=544.205 / 474.47
=1.147

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))
=(48.697 / (48.697 + 70.579)) / (56.157 / (56.157 + 77.715))
=0.40827157 / 0.41948279
=0.9733

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)
=(170.352 / 544.205) / (167.053 / 474.47)
=0.3130291 / 0.35208338
=0.8891

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)
=((12.476 + 84.899) / 823.897) / ((11.789 + 64.354) / 727.924)
=0.11818832 / 0.10460295
=1.1299

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
=(-11.938 - 0 - 81.306) / 823.897
=-0.1132

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 -2.84 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

Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15
DSRI 0.46811.31871.05690.88451.33371.30430.87631.08610.82511.0401
GMI 0.69461.0751.17880.9290.94210.98421.12311.12450.98981.0088
AQI 1.09930.94160.92930.94211.10641.02010.97280.85070.99951.0483
SGI 2.10820.7781.35381.01251.03391.14631.31681.29220.98421.147
DEPI 0.77951.22751.050.98140.94730.85740.88891.34121.00050.9733
SGAI 0.82541.48670.83981.08941.05610.9960.90890.98571.13870.8891
LVGI 0.7540.45931.0180.85641.39021.77280.90341.25140.20711.1299
TATA 0.0365-0.0443-0.0487-0.085-0.0429-0.0569-0.0784-0.0287-0.0976-0.1132
M-score -1.85-2.46-2.25-3.00-2.47-2.60-2.59-2.31-2.88-2.84

Epiq Systems Inc Quarterly Data

Sep13Dec13Mar14Jun14Sep14Dec14Mar15Jun15Sep15Dec15
DSRI 1.06661.08611.0250.80790.84320.82510.93731.09551.06141.0401
GMI 1.15161.12450.99911.00850.98980.98981.01871.01091.02751.0088
AQI 0.86660.85070.89650.93631.00130.99950.97481.02681.04041.0483
SGI 1.27751.29221.18021.16471.09010.98420.97610.97921.05311.147
DEPI 1.25641.34121.30581.21081.01081.00050.98591.05141.07050.9733
SGAI 0.93630.98581.16051.15921.16431.13871.03170.96180.9320.8891
LVGI 1.19751.25141.15711.13170.97750.20711.00321.14131.18471.1299
TATA -0.0336-0.0287-0.0446-0.0941-0.0867-0.0976-0.098-0.089-0.1216-0.1132
M-score -2.33-2.31-2.59-3.02-2.97-2.88-3.03-2.84-2.95-2.84
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