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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 -1.54. The lowest was -4.70. And the median was -2.48.
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 * 0.9373||+||0.528 * 1.0187||+||0.404 * 0.9748||+||0.892 * 0.9761||+||0.115 * 0.9859|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0317||+||4.679 * -0.098||-||0.327 * 1.0032|
|This Year (Mar15) TTM:||Last Year (Mar14) TTM:|
|Accounts Receivable was $129.8 Mil.|
Revenue was 119.028 + 115.137 + 111.006 + 125.056 = $470.2 Mil.
Gross Profit was 57.495 + 55.653 + 55.986 + 58.089 = $227.2 Mil.
Total Current Assets was $196.5 Mil.
Total Assets was $731.2 Mil.
Property, Plant and Equipment(Net PPE) was $70.2 Mil.
Depreciation, Depletion and Amortization(DDA) was $48.3 Mil.
Selling, General & Admin. Expense(SGA) was $161.9 Mil.
Total Current Liabilities was $60.1 Mil.
Long-Term Debt was $299.6 Mil.
Net Income was 1.733 + -0.63 + 5.01 + -3.419 = $2.7 Mil.
Non Operating Income was 0 + 0 + 0 + 0 = $0.0 Mil.
Cash Flow from Operations was 3.824 + 32.358 + 18.594 + 19.601 = $74.4 Mil.
|Accounts Receivable was $141.9 Mil.
Revenue was 123.271 + 129.437 + 115.684 + 113.372 = $481.8 Mil.
Gross Profit was 58.833 + 64.542 + 57.993 + 55.772 = $237.1 Mil.
Total Current Assets was $178.2 Mil.
Total Assets was $723.6 Mil.
Property, Plant and Equipment(Net PPE) was $73.9 Mil.
Depreciation, Depletion and Amortization(DDA) was $49.7 Mil.
Selling, General & Admin. Expense(SGA) was $160.8 Mil.
Total Current Liabilities was $56.1 Mil.
Long-Term Debt was $298.6 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)|
|=||(129.801 / 470.227)||/||(141.884 / 481.764)|
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)|
|=||(55.653 / 481.764)||/||(57.495 / 470.227)|
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 - (196.494 + 70.217) / 731.224)||/||(1 - (178.15 + 73.893) / 723.587)|
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))|
|=||(49.66 / (49.66 + 73.893))||/||(48.327 / (48.327 + 70.217))|
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)|
|=||(161.941 / 470.227)||/||(160.815 / 481.764)|
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)|
|=||((299.568 + 60.089) / 731.224)||/||((298.628 + 56.121) / 723.587)|
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|
|=||(2.694 - 0||-||74.377)||/||731.224|
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 -3.03 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