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Mercer International Inc (NAS:MERC)
Beneish M-Score
-2.38 (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 -2.38 suggests that the company is not a manipulator.

MERC' s 10-Year Beneish M-Score Range
Min: -3.32   Max: 0.14
Current: -2.38

-3.32
0.14

During the past 13 years, the highest Beneish M-Score of Mercer International Inc was 0.14. The lowest was -3.32. And the median was -2.32.


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 * 0.9932+0.528 * 0.4594+0.404 * 2.0134+0.892 * 1.0797+0.115 * 0.8673
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.8675+4.679 * -0.0312-0.327 * 0.8412
=-2.38

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

This Year (Dec14) TTM:Last Year (Dec13) TTM:
Accounts Receivable was $134 Mil.
Revenue was 282.625 + 301.61 + 285.192 + 305.685 = $1,175 Mil.
Gross Profit was 65.622 + 59.465 + 34.959 + 49.679 = $210 Mil.
Total Current Assets was $378 Mil.
Total Assets was $1,327 Mil.
Property, Plant and Equipment(Net PPE) was $883 Mil.
Depreciation, Depletion and Amortization(DDA) was $78 Mil.
Selling, General & Admin. Expense(SGA) was $48 Mil.
Total Current Liabilities was $116 Mil.
Long-Term Debt was $691 Mil.
Net Income was 3.205 + 88.337 + 0.571 + 21.041 = $113 Mil.
Non Operating Income was -27.681 + 31.89 + 2.467 + 3.234 = $10 Mil.
Cash Flow from Operations was 26.771 + 36.849 + 21.289 + 59.679 = $145 Mil.
Accounts Receivable was $125 Mil.
Revenue was 282.682 + 269.218 + 274.7 + 261.785 = $1,088 Mil.
Gross Profit was 24.159 + 29.664 + 11.07 + 24.351 = $89 Mil.
Total Current Assets was $472 Mil.
Total Assets was $1,549 Mil.
Property, Plant and Equipment(Net PPE) was $1,039 Mil.
Depreciation, Depletion and Amortization(DDA) was $79 Mil.
Selling, General & Admin. Expense(SGA) was $51 Mil.
Total Current Liabilities was $180 Mil.
Long-Term Debt was $938 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)
=(133.586 / 1175.112) / (124.579 / 1088.385)
=0.11367938 / 0.11446225
=0.9932

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)
=(59.465 / 1088.385) / (65.622 / 1175.112)
=0.08199672 / 0.17847235
=0.4594

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 - (377.835 + 883.15) / 1326.807) / (1 - (471.773 + 1038.631) / 1548.559)
=0.04960933 / 0.02463904
=2.0134

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
=1175.112 / 1088.385
=1.0797

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))
=(78.645 / (78.645 + 1038.631)) / (78.012 / (78.012 + 883.15))
=0.07038995 / 0.08116426
=0.8673

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)
=(47.927 / 1175.112) / (51.169 / 1088.385)
=0.04078505 / 0.04701369
=0.8675

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)
=((690.733 + 115.503) / 1326.807) / ((938.31 + 180.259) / 1548.559)
=0.6076513 / 0.72232895
=0.8412

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
=(113.154 - 9.91 - 144.588) / 1326.807
=-0.0312

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 -2.38 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

Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14
DSRI 0.67990.7391.01611.04930.88561.11791.02721.03760.91790.9932
GMI 0.79040.4511.35912.50142.31150.10241.33241.5921.27660.4594
AQI 0.94440.98830.56040.20421.38560.77251.8531.32630.9812.0134
SGI 1.59461.5381.28760.94560.88561.35630.96790.92021.01461.0797
DEPI 0.61310.90890.95730.96221.01320.94280.97510.97620.92940.8673
SGAI 0.36040.77431.38440.99141.05640.83221.17111.06551.02370.8675
LVGI 0.95190.99890.95891.12321.03290.8840.92080.99031.04760.8412
TATA -0.0382-0.0869-0.0255-0.026-0.09140.0051-0.0511-0.0509-0.054-0.0312
M-score -2.47-2.91-2.37-2.18-2.29-2.54-2.21-2.32-2.68-2.38

Mercer International Inc Quarterly Data

Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14Dec14
DSRI 1.16441.061.10440.98420.89990.92170.89540.9920.94340.9932
GMI 2.28621.60391.49051.71981.11941.27670.96250.61290.57780.4594
AQI 2.80681.32631.11840.99731.06310.9811.06241.16981.87012.0134
SGI 0.87810.90080.89470.97620.95251.01041.08091.07421.12481.0797
DEPI 0.97580.9730.90980.91340.95290.93250.9450.94390.85680.8673
SGAI 1.17151.06561.05231.02191.01711.02330.96480.9580.90030.8675
LVGI 0.99160.99031.00821.02871.03461.04761.01270.94390.88910.8412
TATA -0.0604-0.0516-0.0455-0.0602-0.0506-0.054-0.058-0.0429-0.0239-0.0312
M-score -1.34-2.32-2.41-2.44-2.78-2.68-2.77-2.74-2.37-2.38
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