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Mercer International Inc (NAS:MERC)
Beneish M-Score
-3.10 (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.

Mercer International Inc has a M-score of -3.10 suggests that the company is not a manipulator.

MERC' s Beneish M-Score Range Over the Past 10 Years
Min: -5.88   Max: 0.27
Current: -3.1

-5.88
0.27

During the past 13 years, the highest Beneish M-Score of Mercer International Inc was 0.27. The lowest was -5.88. And the median was -2.45.


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 Mercer International 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 * 1.0726+0.528 * 0.6983+0.404 * 0.6201+0.892 * 0.9328+0.115 * 0.9492
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0799+4.679 * -0.0619-0.327 * 1.0163
=-3.10

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

This Year (Sep15) TTM:Last Year (Sep14) TTM:
Accounts Receivable was $139 Mil.
Revenue was 270.893 + 266.936 + 257.547 + 282.625 = $1,078 Mil.
Gross Profit was 56.497 + 45.25 + 55.295 + 65.622 = $223 Mil.
Total Current Assets was $453 Mil.
Total Assets was $1,272 Mil.
Property, Plant and Equipment(Net PPE) was $784 Mil.
Depreciation, Depletion and Amortization(DDA) was $70 Mil.
Selling, General & Admin. Expense(SGA) was $49 Mil.
Total Current Liabilities was $136 Mil.
Long-Term Debt was $683 Mil.
Net Income was 23.76 + 16.412 + 13.634 + 3.205 = $57 Mil.
Non Operating Income was -0.418 + 2.266 + -7.148 + -27.681 = $-33 Mil.
Cash Flow from Operations was 71.69 + 10.434 + 59.845 + 26.771 = $169 Mil.
Accounts Receivable was $139 Mil.
Revenue was 301.61 + 285.192 + 305.685 + 263.174 = $1,156 Mil.
Gross Profit was 59.465 + 34.959 + 49.679 + 22.584 = $167 Mil.
Total Current Assets was $554 Mil.
Total Assets was $1,548 Mil.
Property, Plant and Equipment(Net PPE) was $924 Mil.
Depreciation, Depletion and Amortization(DDA) was $78 Mil.
Selling, General & Admin. Expense(SGA) was $48 Mil.
Total Current Liabilities was $145 Mil.
Long-Term Debt was $836 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)
=(139.405 / 1078.001) / (139.326 / 1155.661)
=0.12931806 / 0.12055958
=1.0726

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)
=(45.25 / 1155.661) / (56.497 / 1078.001)
=0.1442352 / 0.20655268
=0.6983

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 - (453.07 + 783.773) / 1272.417) / (1 - (554.13 + 923.993) / 1547.916)
=0.02795782 / 0.04508836
=0.6201

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
=1078.001 / 1155.661
=0.9328

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))
=(77.904 / (77.904 + 923.993)) / (69.933 / (69.933 + 783.773))
=0.0777565 / 0.08191696
=0.9492

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)
=(48.804 / 1078.001) / (48.45 / 1155.661)
=0.04527269 / 0.04192406
=1.0799

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)
=((683.439 + 136.114) / 1272.417) / ((836.315 + 144.721) / 1547.916)
=0.64409152 / 0.63377858
=1.0163

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
=(57.011 - -32.981 - 168.74) / 1272.417
=-0.0619

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.

Mercer International Inc has a M-score of -3.10 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.

Mercer International Inc Annual Data

Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15
DSRI 0.83941.04751.01780.88561.12421.0331.00070.94110.99321.0162
GMI 0.3391.19622.69072.31150.10191.32491.61011.27660.45940.8701
AQI 0.98830.56040.20421.30150.82241.8531.32640.9812.01340.5388
SGI 1.3541.2490.97480.88561.34870.96240.9570.98661.07970.8792
DEPI 0.90890.95590.96371.01320.94280.97510.95370.95130.86730.9867
SGAI 0.77690.9280.98071.05640.83961.17391.05351.02370.86751.0972
LVGI 0.99890.95891.12321.03290.8840.92080.99031.03380.85251.0501
TATA -0.0869-0.0255-0.026-0.09140.0051-0.0511-0.0522-0.054-0.0312-0.065
M-score -3.04-2.39-2.08-2.32-2.52-2.21-2.32-2.68-2.38-3.17

Mercer International Inc Quarterly Data

Sep13Dec13Mar14Jun14Sep14Dec14Mar15Jun15Sep15Dec15
DSRI 0.87240.96220.92751.02550.98390.9720.90151.15361.07261.0162
GMI 1.11451.27740.95940.61590.57930.46080.53250.59890.69830.8701
AQI 1.06310.9811.06241.16981.87012.01341.74631.45010.62010.5388
SGI 0.98260.9651.04351.03911.07851.10321.00910.98280.93280.8792
DEPI 0.92520.9670.9690.98520.89410.85320.80820.87170.94920.9867
SGAI 1.01681.02090.96430.95780.89910.86660.98460.97091.07991.0972
LVGI 1.03461.03381.01270.94390.88910.85250.94070.94821.01631.0501
TATA -0.0516-0.0521-0.0568-0.0415-0.0224-0.0312-0.0312-0.0092-0.0619-0.065
M-score -2.79-2.67-2.77-2.73-2.36-2.38-2.65-2.42-3.10-3.17
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