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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 -2.31 suggests that the company is not a manipulator.
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.
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|
|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
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)|
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)|
|=||(57.993 / 373.085)||/||(64.542 / 482.083)|
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 - (199.969 + 72.118) / 747.781)||/||(1 - (120.604 + 44.552) / 654.716)|
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))|
|=||(53.987 / (53.987 + 44.552))||/||(49.805 / (49.805 + 72.118))|
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)|
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)|
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|
|=||(11.11 - 0||-||32.598)||/||747.781|
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.
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