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Mercer International Inc (NAS:MERC)
Piotroski F-Score
6 (As of Today)

The zones of discrimination were as such:

Good or high score = 8 or 9
Bad or low score = 0 or 1

Mercer International Inc has an F-score of 6 indicating the company's financial situation is typical for a stable company.

MERC' s 10-Year Piotroski F-Score Range
Min: 1   Max: 9
Current: 6

1
9

During the past 13 years, the highest Piotroski F-Score of Mercer International Inc was 9. The lowest was 1. And the median was 5.


Definition

How is the Piotroski F-Score calculated?

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

This Year (Mar14) TTM:Last Year (Mar13) TTM:
Net Income was 21.041 + -9.432 + -2.996 + -12.91 = $-4 Mil.
Cash Flow from Operations was 59.679 + -24.604 + 6.535 + 23.931 = $66 Mil.
Revenue was 305.685 + 263.174 + 274.092 + 270.494 = $1,113 Mil.
Gross Profit was 49.679 + 22.584 + 30.274 + 10.792 = $113 Mil.
Total Assets at the begining of this year (Mar13) was $1,519 Mil.
Total Assets was $1,547 Mil.
Long-Term Debt was $906 Mil.
Total Current Assets was $495 Mil.
Total Current Liabilities was $185 Mil.
Net Income was -0.561 + -6.601 + -12.54 + 1.919 = $-18 Mil.

Revenue was 261.785 + 239.043 + 288.283 + 258.444 = $1,048 Mil.
Gross Profit was 24.351 + 21.34 + 22.234 + 34.094 = $102 Mil.
Total Assets at the begining of last year (Mar12) was $1,619 Mil.
Total Assets was $1,519 Mil.
Long-Term Debt was $861 Mil.
Total Current Assets was $456 Mil.
Total Current Liabilities was $197 Mil.

Profitability

Q1. Return on Assets (ROA)

Net income before extraordinary items for the year divided by total assets at the beginning of the year.

Score 1 if positive, 0 if negative.

Mercer International Inc's current net income was -4. ==> Negative ==> Score 0.

Q2. Cash Flow Return on Assets (CFROA)

Net cash flow from operating activities (operating cash flow) divided by total assets at the beginning of the year.

Score 1 if positive, 0 if negative.

Mercer International Inc's current cash flow from operations was 66. ==> Positive ==> Score 1.

Q3. Change in Return on Assets

Compare this year’s return on assets (1) to last year’s return on assets.

Score 1 if it’s higher, 0 if it’s lower.

ROA (This Year)=Net Income/Total Assets at the beginning of this year (Mar13)
=-4.297/1519.267
=-0.00282834

ROA (Last Year)=Net Income/Total Assets at the beginning of last year (Mar12)
=-17.783/1619.023
=-0.01098378

Mercer International Inc's return on assets of this year was -0.00282834. Mercer International Inc's return on assets of last year was -0.01098378. ==> This year is higher. ==> Score 1.

Q4. Quality of Earnings (Accrual)

Compare Cash flow return on assets (2) to return on assets (1)

Score 1 if CFROA > ROA, 0 if CFROA =< ROA.

Mercer International Inc's current net income was -4. Mercer International Inc's current cash flow from operations was 66. ==> 66 > -4 ==> CFROA > ROA ==> Score 1.

Funding

Q5. Change in Gearing or Leverage

Compare this year’s gearing (long-term debt divided by average total assets) to last year’s gearing.

Score 1 if gearing is lower, 0 if it’s higher.

Gearing (This Year)=Long-Term Debt/Total Assets
=905.92/1546.673
=0.58572174

Gearing (Last Year)=Long-Term Debt/Total Assets
=861.22/1519.267
=0.56686547

Mercer International Inc's gearing of this year was 0.58572174. Mercer International Inc's gearing of last year was 0.56686547. ==> Last year is lower ==> Score 0.

Q6. Change in Working Capital (Liquidity)

Compare this year’s current ratio (current assets divided by current liabilities) to last year’s current ratio.

Score 1 if this year’s current ratio is higher, 0 if it’s lower

Current Ratio (This Year)=Total Current Assets/Total Current Liabilities
=495.12/184.826
=2.67884389

Current Ratio (Last Year)=Total Current Assets/Total Current Liabilities
=456.045/196.763
=2.31773758

Mercer International Inc's current ratio of this year was 2.67884389. Mercer International Inc's current ratio of last year was 2.31773758. ==> This year's current ratio is higher. ==> Score 1.

Q7. Change in Shares in Issue

Compare the number of shares in issue this year, to the number in issue last year.

Score 1 if there is fewer number of shares in issue this year. Score 0 otherwise.

Mercer International Inc's number of shares in issue this year was 56.3. Mercer International Inc's number of shares in issue last year was 55.6. ==> There is more number of shares in issue this year. ==> Score 0.

Efficiency

Q8. Change in Gross Margin

Compare this year’s gross margin (gross profit divided by sales) to last year’s.

Score 1 if this year’s gross margin is higher, 0 if it’s lower.

Gross Margin (This Year)=Gross Profit/Revenue
=113.329/1113.445
=0.10178231

Gross Margin (Last Year)=Gross Profit/Revenue
=102.019/1047.555
=0.09738773

Mercer International Inc's gross margin of this year was 0.10178231. Mercer International Inc's gross margin of last year was 0.09738773. ==> This year's gross margin is higher. ==> Score 1.

Q9. Change in asset turnover

Compare this year’s asset turnover (total sales divided by total assets at the beginning of the year) to last year’s asset turnover ratio.

Score 1 if this year’s asset turnover ratio is higher, 0 if it’s lower

Asset Turnover (This Year)=Revenue/Total Assets at the beginning of this year (Mar13)
=1113.445/1519.267
=0.73288303

Asset Turnover (Last Year)=Revenue/Total Assets at the beginning of last year (Mar12)
=1047.555/1619.023
=0.6470291

Mercer International Inc's asset turnover of this year was 0.73288303. Mercer International Inc's asset turnover of last year was 0.6470291. ==> This year's asset turnover is higher. ==> Score 1.

Evaluation

Piotroski F-Score=Q1+Q2+Q3+Q4+Q5+Q6+Q7+Q8+Q9
=0+1+1+1+0+1+0+1+1
=6

Good or high score = 8 or 9

Bad or low score = 0 or 1

Mercer International Inc has an F-score of 6 indicating the company's financial situation is typical for a stable company.


Explanation

The developer of the system is Joseph D. Piotroski is relatively unknown accounting professor who shuns publicity and rarely gives interviews.

He graduated from the University of Illinois with a B.S. in accounting in 1989, received an M.B.A. from Indiana University in 1994. Five years later, in 1999, after earning a Ph.D. in accounting from the University of Michigan, he became an associate professor of accounting at the University of Chicago.

In 2000, he wrote a research paper called "Value Investing: The Use of Historical Financial Statement Information to Separate Winners from Losers" (pdf).

He wanted to see if he can develop a system (using a simple nine-point scoring system) that can increase the returns of a strategy of investing in low price to book (referred to in the paper as high book to market) value companies.

What he found was something that exceeded his most optimistic expectations.

Buying only those companies that scored highest (8 or 9) on his nine-point scale, or F-Score as he called it, over the 20 year period from 1976 to 1996 led to an average out-performance over the market of 13.4%.

Even more impressive were the results of a strategy of investing in the highest F-Score companies (8 or 9) and shorting companies with the lowest F-Score (0 or 1).

Over the same period from 1976 to 1996 (20 years) this strategy led to an average yearly return of 23%, substantially outperforming the average S&P 500 index return of 15.83% over the same period.


Related Terms

Net Income, Cash Flow from Operations, Revenue, Gross Profit, Total Assets, Long-Term Debt, Total Current Assets, Total Current Liabilities


Historical Data

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

Mercer International Inc Annual Data

Dec04Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13
Q1 1011001100
Q2 1111011111
Q3 1010001000
Q4 0100111111
Q5 0001001110
Q6 1111101101
Q7 0001100010
Q8 0110001000
Q9 0111011001
F-score 4566338544

Mercer International Inc Quarterly Data

Dec11Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14
Q1 1110000000
Q2 1111111111
Q3 0000000001
Q4 1111111111
Q5 1111110000
Q6 1110000111
Q7 1111111000
Q8 0000000001
Q9 0000001111
F-score 6664444446
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