Switch to:
Mercer International Inc (NAS:MERC)
Beneish M-Score
-2.94 (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 -2.94 suggests that the company is not a manipulator.

MERC' s Beneish M-Score Range Over the Past 10 Years
Min: -5.89   Max: 0.27
Current: -2.94

-5.89
0.27

During the past 13 years, the highest Beneish M-Score of Mercer International Inc was 0.27. The lowest was -5.89. And the median was -2.43.


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 * 1.1088+0.528 * 1.0011+0.404 * 0.5903+0.892 * 0.9135+0.115 * 1.116
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0451+4.679 * -0.0747-0.327 * 0.9145
=-2.94

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

This Year (Mar16) TTM:Last Year (Mar15) TTM:
Accounts Receivable was $137 Mil.
Revenue was 253.843 + 237.828 + 270.893 + 266.936 = $1,030 Mil.
Gross Profit was 39.869 + 54.878 + 56.497 + 45.25 = $196 Mil.
Total Current Assets was $416 Mil.
Total Assets was $1,238 Mil.
Property, Plant and Equipment(Net PPE) was $792 Mil.
Depreciation, Depletion and Amortization(DDA) was $68 Mil.
Selling, General & Admin. Expense(SGA) was $47 Mil.
Total Current Liabilities was $123 Mil.
Long-Term Debt was $628 Mil.
Net Income was 8.769 + 21.696 + 23.76 + 16.412 = $71 Mil.
Non Operating Income was 0.059 + -1.542 + -0.418 + 2.266 = $0 Mil.
Cash Flow from Operations was 63.466 + 17.251 + 71.69 + 10.434 = $163 Mil.
Accounts Receivable was $136 Mil.
Revenue was 257.547 + 282.625 + 301.61 + 285.192 = $1,127 Mil.
Gross Profit was 55.295 + 65.622 + 59.465 + 34.959 = $215 Mil.
Total Current Assets was $403 Mil.
Total Assets was $1,234 Mil.
Property, Plant and Equipment(Net PPE) was $779 Mil.
Depreciation, Depletion and Amortization(DDA) was $76 Mil.
Selling, General & Admin. Expense(SGA) was $49 Mil.
Total Current Liabilities was $131 Mil.
Long-Term Debt was $687 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)
=(137.344 / 1029.5) / (135.6 / 1126.974)
=0.13340845 / 0.12032221
=1.1088

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)
=(54.878 / 1126.974) / (39.869 / 1029.5)
=0.19107894 / 0.19086353
=1.0011

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 - (415.994 + 791.893) / 1238.464) / (1 - (402.847 + 779.211) / 1233.652)
=0.02468945 / 0.04182217
=0.5903

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
=1029.5 / 1126.974
=0.9135

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))
=(75.612 / (75.612 + 779.211)) / (68.165 / (68.165 + 791.893))
=0.0884534 / 0.07925628
=1.116

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)
=(46.641 / 1029.5) / (48.855 / 1126.974)
=0.04530452 / 0.0433506
=1.0451

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)
=((628.27 + 123.08) / 1238.464) / ((687.207 + 131.191) / 1233.652)
=0.60667892 / 0.66339454
=0.9145

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
=(70.637 - 0.365 - 162.841) / 1238.464
=-0.0747

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 -2.94 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 0.83941.04751.01780.88561.12420.7971.29310.9440.99321.0162
GMI 0.3391.19622.69072.31150.10191.32491.61011.27660.45940.8701
AQI 0.98830.56040.20421.38560.77251.8531.32630.9812.02620.5354
SGI 1.3541.2490.97480.88561.34870.96240.9570.98661.07970.8792
DEPI 0.90890.95590.96371.01320.94280.76661.20970.9540.86730.9867
SGAI 0.77690.9280.98071.05640.83961.17391.05351.02370.86751.0972
LVGI 0.99890.95891.12321.03290.8840.92080.99031.04760.83981.0519
TATA -0.0869-0.0255-0.026-0.09140.0051-0.0662-0.0523-0.054-0.0317-0.065
M-score -3.04-2.39-2.08-2.29-2.54-2.52-2.02-2.68-2.37-3.17

Mercer International Inc Quarterly Data

Dec13Mar14Jun14Sep14Dec14Mar15Jun15Sep15Dec15Mar16
DSRI 0.92170.89540.9920.94340.99320.9141.16851.09081.01621.1088
GMI 1.27670.96250.61290.57780.45940.52960.59540.69320.87011.0011
AQI 0.9811.06241.16981.87012.02621.74631.45010.62010.53540.5903
SGI 1.01041.08091.07421.12481.07970.99530.97020.91730.87920.9135
DEPI 0.93250.9450.94390.85680.86730.81580.88270.96510.98671.116
SGAI 1.02330.96480.9580.90030.86750.98440.97071.07841.09721.0451
LVGI 1.04761.01270.94390.88910.83980.94070.94821.01631.05190.9145
TATA -0.054-0.058-0.0429-0.0239-0.0317-0.0312-0.0092-0.0619-0.065-0.0747
M-score -2.68-2.77-2.74-2.37-2.37-2.66-2.42-3.10-3.17-2.94
Get WordPress Plugins for easy affiliate links on Stock Tickers and Guru Names | Earn affiliate commissions by embedding GuruFocus Charts
GuruFocus Affiliate Program: Earn up to $400 per referral. ( Learn More)
FEEDBACK