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Epiq Systems, Inc. (NAS:EPIQ)
Beneish M-Score
-2.31 (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 -2.31 suggests that the company is not a manipulator.

EPIQ' s 10-Year Beneish M-Score Range
Min: -3.34   Max: -2.02
Current: -2.31

-3.34
-2.02

During the past 13 years, the highest Beneish M-Score of Epiq Systems, Inc. was -2.02. The lowest was -3.34. And the median was -2.39.


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 * 1.0861+0.528 * 1.1245+0.404 * 0.8507+0.892 * 1.2922+0.115 * 1.3412
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9857+4.679 * -0.0287-0.327 * 1.2514
=-2.31

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

This Year (Dec13) TTM:Last Year (Dec12) TTM:
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 $149.0 Mil.
Total Current Liabilities was $78.6 Mil.
Long-Term Debt was $299.1 Mil.
Net Income was 0.096 + 4.235 + 2.842 + 3.937 = $11.1 Mil.
Non Operating Income was 0 + 0 + 0 + 0 = $0.0 Mil.
Cash Flow from Operations was 24.006 + 23.961 + -10.024 + -5.345 = $32.6 Mil.
Accounts Receivable was $103.4 Mil.
Revenue was 95.731 + 90.987 + 97.895 + 88.472 = $373.1 Mil.
Gross Profit was 50.28 + 49.75 + 49.172 + 50.828 = $200.0 Mil.
Total Current Assets was $120.6 Mil.
Total Assets was $654.7 Mil.
Property, Plant and Equipment(Net PPE) was $44.6 Mil.
Depreciation, Depletion and Amortization(DDA) was $54.0 Mil.
Selling, General & Admin. Expense(SGA) was $117.0 Mil.
Total Current Liabilities was $60.9 Mil.
Long-Term Debt was $203.3 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)
=(145.134 / 482.083) / (103.415 / 373.085)
=0.30105604 / 0.27718884
=1.0861

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)
=(57.993 / 373.085) / (64.542 / 482.083)
=0.53615128 / 0.47680379
=1.1245

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 - (199.969 + 72.118) / 747.781) / (1 - (120.604 + 44.552) / 654.716)
=0.6361408 / 0.74774406
=0.8507

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
=482.083 / 373.085
=1.2922

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))
=(53.987 / (53.987 + 44.552)) / (49.805 / (49.805 + 72.118))
=0.54787445 / 0.40849553
=1.3412

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)
=(149.045 / 482.083) / (117.023 / 373.085)
=0.30916875 / 0.31366311
=0.9857

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)
=((299.108 + 78.564) / 747.781) / ((203.288 + 60.949) / 654.716)
=0.50505696 / 0.40359026
=1.2514

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
=(11.11 - 0 - 32.598) / 747.781
=-0.0287

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 -2.31 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

Dec04Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13
DSRI 1.13861.88820.41531.30561.05690.88451.33371.30430.87631.0861
GMI 1.81680.84590.69461.0751.17880.9290.94210.98421.12311.1245
AQI 1.28060.99911.09930.94160.92930.94211.10641.02010.97280.8507
SGI 1.4481.08092.10820.7781.35381.01251.03391.14631.31681.2922
DEPI 0.96791.17960.77951.22751.050.98140.94730.85740.88891.3412
SGAI 1.05991.11050.82541.48670.83981.08941.05610.9960.90890.9857
LVGI 5.00081.59140.7540.45931.0180.85641.39021.77280.90341.2514
TATA -0.155-0.05830.0365-0.0443-0.0487-0.085-0.0429-0.0569-0.0784-0.0287
M-score -3.46-2.14-1.89-2.47-2.25-3.00-2.47-2.60-2.59-2.31

Epiq Systems, Inc. Quarterly Data

Sep11Dec11Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13
DSRI 1.17021.30431.30650.90870.98340.87630.95361.18181.06661.0861
GMI 0.99550.98420.98791.06121.07931.12311.2151.15361.15161.1245
AQI 1.06081.02011.0050.99470.98890.97280.95410.91770.86660.8507
SGI 1.18571.14631.24171.29561.26591.31681.30761.26051.27751.2922
DEPI 0.77940.85740.81330.89610.940.88891.00751.06151.25641.3412
SGAI 0.96590.9961.05060.98060.94120.90890.81250.89590.93640.9857
LVGI 3.17131.77281.74321.15941.13370.90340.94850.99441.19751.2514
TATA -0.049-0.0569-0.0651-0.0991-0.0691-0.0784-0.04360.0032-0.0336-0.0287
M-score -3.09-2.60-2.56-2.79-2.58-2.59-2.31-1.99-2.33-2.31
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