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Mercer International Inc (NAS:MERC)
Beneish M-Score
-3.20 (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 -3.20 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: -3.2

-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 -2.44.


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 * 0.9279+0.528 * 1.1193+0.404 * 0.5878+0.892 * 0.8845+0.115 * 0.9947
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0737+4.679 * -0.0944-0.327 * 0.9746
=-3.20

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

This Year (Jun16) TTM:Last Year (Jun15) TTM:
Accounts Receivable was $125.4 Mil.
Revenue was 218.145 + 253.843 + 237.828 + 270.893 = $980.7 Mil.
Gross Profit was 27.063 + 39.869 + 54.878 + 56.497 = $178.3 Mil.
Total Current Assets was $385.8 Mil.
Total Assets was $1,180.3 Mil.
Property, Plant and Equipment(Net PPE) was $767.0 Mil.
Depreciation, Depletion and Amortization(DDA) was $69.6 Mil.
Selling, General & Admin. Expense(SGA) was $45.2 Mil.
Total Current Liabilities was $104.5 Mil.
Long-Term Debt was $628.5 Mil.
Net Income was -4.241 + 8.769 + 21.696 + 23.76 = $50.0 Mil.
Non Operating Income was -0.409 + 0.059 + -1.542 + -0.418 = $-2.3 Mil.
Cash Flow from Operations was 11.277 + 63.466 + 17.251 + 71.69 = $163.7 Mil.
Accounts Receivable was $152.8 Mil.
Revenue was 266.936 + 257.547 + 282.625 + 301.61 = $1,108.7 Mil.
Gross Profit was 45.25 + 55.295 + 65.622 + 59.465 = $225.6 Mil.
Total Current Assets was $417.4 Mil.
Total Assets was $1,267.8 Mil.
Property, Plant and Equipment(Net PPE) was $800.2 Mil.
Depreciation, Depletion and Amortization(DDA) was $72.2 Mil.
Selling, General & Admin. Expense(SGA) was $47.6 Mil.
Total Current Liabilities was $111.8 Mil.
Long-Term Debt was $696.1 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)
=(125.384 / 980.709) / (152.767 / 1108.718)
=0.12785036 / 0.13778707
=0.9279

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)
=(225.632 / 1108.718) / (178.307 / 980.709)
=0.20350711 / 0.18181438
=1.1193

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 - (385.764 + 767.014) / 1180.269) / (1 - (417.367 + 800.244) / 1267.848)
=0.02329215 / 0.03962384
=0.5878

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
=980.709 / 1108.718
=0.8845

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))
=(72.244 / (72.244 + 800.244)) / (69.644 / (69.644 + 767.014))
=0.08280228 / 0.0832407
=0.9947

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)
=(45.226 / 980.709) / (47.618 / 1108.718)
=0.04611562 / 0.0429487
=1.0737

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)
=((628.473 + 104.528) / 1180.269) / ((696.114 + 111.798) / 1267.848)
=0.62104571 / 0.63723096
=0.9746

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
=(49.984 - -2.31 - 163.684) / 1180.269
=-0.0944

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 -3.20 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 0.7391.01611.04930.88561.11790.7381.44420.91790.99321.0162
GMI 0.4511.35912.50142.31150.10241.33241.5921.27660.45940.8701
AQI 0.98830.56040.20421.38560.77251.8531.32630.9812.02620.5354
SGI 1.5381.28760.94560.88561.35631.03950.85681.01461.07970.8792
DEPI 0.90890.95730.96221.01320.94280.71811.32550.92940.86730.9867
SGAI 0.77431.38440.99141.05640.83221.17111.06551.02370.86751.0972
LVGI 0.99890.95891.12321.03290.8840.92080.99031.04760.83981.0519
TATA -0.0869-0.0255-0.026-0.09140.0051-0.0711-0.0509-0.054-0.0317-0.065
M-score -2.91-2.37-2.18-2.29-2.54-2.53-1.96-2.68-2.37-3.17

Mercer International Inc Quarterly Data

Mar14Jun14Sep14Dec14Mar15Jun15Sep15Dec15Mar16Jun16
DSRI 0.89540.9920.94340.99320.9141.16851.09081.01621.10880.9279
GMI 0.96250.61290.57780.45940.52960.59540.69320.87011.00111.1193
AQI 1.06241.16981.87012.02621.74631.45010.62010.53540.59030.5878
SGI 1.08091.07421.12481.07970.99530.97020.91730.87920.91350.8845
DEPI 0.9450.94390.85680.86730.81580.88270.96510.98671.1160.9947
SGAI 0.96480.9580.90030.86750.98440.97071.07841.09721.04511.0737
LVGI 1.01270.94390.88910.83980.94070.94821.01631.05190.91450.9746
TATA -0.058-0.0429-0.0239-0.0317-0.0312-0.0092-0.0619-0.065-0.0747-0.0944
M-score -2.77-2.74-2.37-2.37-2.66-2.42-3.10-3.17-2.94-3.20
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