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Mercer International Inc (NAS:MERC)
Beneish M-Score
-2.36 (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 -2.36 suggests that the company is not a manipulator.

MERC' s 10-Year Beneish M-Score Range
Min: -6.03   Max: 0.14
Current: -2.36

-6.03
0.14

During the past 13 years, the highest Beneish M-Score of Mercer International Inc was 0.14. The lowest was -6.03. And the median was -2.42.


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 * 0.9839+0.528 * 0.5793+0.404 * 1.8701+0.892 * 1.0785+0.115 * 0.8941
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.8991+4.679 * -0.0224-0.327 * 0.8891
=-2.36

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

This Year (Sep14) TTM:Last Year (Sep13) TTM:
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.
Net Income was 88.337 + 0.571 + 21.041 + -9.432 = $101 Mil.
Non Operating Income was 31.89 + 2.467 + 3.234 + 4.463 = $42 Mil.
Cash Flow from Operations was 36.849 + 21.289 + 59.679 + -24.604 = $93 Mil.
Accounts Receivable was $131 Mil.
Revenue was 274.092 + 273.877 + 254.081 + 269.467 = $1,072 Mil.
Gross Profit was 30.274 + 11.106 + 23.634 + 24.524 = $90 Mil.
Total Current Assets was $500 Mil.
Total Assets was $1,588 Mil.
Property, Plant and Equipment(Net PPE) was $1,049 Mil.
Depreciation, Depletion and Amortization(DDA) was $78 Mil.
Selling, General & Admin. Expense(SGA) was $50 Mil.
Total Current Liabilities was $199 Mil.
Long-Term Debt was $932 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)
=(139.326 / 1155.661) / (131.301 / 1071.517)
=0.12055958 / 0.12253749
=0.9839

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)
=(34.959 / 1071.517) / (59.465 / 1155.661)
=0.0835619 / 0.1442352
=0.5793

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 - (554.13 + 923.993) / 1547.916) / (1 - (500.229 + 1049.044) / 1587.548)
=0.04508836 / 0.02410951
=1.8701

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
=1155.661 / 1071.517
=1.0785

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))
=(78.384 / (78.384 + 1049.044)) / (77.904 / (77.904 + 923.993))
=0.06952462 / 0.0777565
=0.8941

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)
=(48.45 / 1155.661) / (49.961 / 1071.517)
=0.04192406 / 0.04662642
=0.8991

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)
=((836.315 + 144.721) / 1547.916) / ((932.371 + 199.339) / 1587.548)
=0.63377858 / 0.71286663
=0.8891

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
=(100.517 - 42.054 - 93.213) / 1547.916
=-0.0224

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 -2.36 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

Dec04Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13
DSRI 1.32940.59860.83941.04911.01620.88561.12421.0331.00070.9411
GMI 1.19911.11070.3391.19622.69072.31150.10191.32491.61011.2766
AQI 1.34180.94440.98830.56040.71820.37010.82241.8531.32640.981
SGI 1.37291.81121.3541.2490.97480.88561.34870.96240.9570.9866
DEPI 1.02630.61310.90890.95730.96221.01320.94280.97510.95370.9513
SGAI 1.10070.54170.77690.9280.98071.05640.83961.17391.05351.0237
LVGI 0.99590.95190.99890.95891.05681.09780.8840.92080.99031.0338
TATA 0.0016-0.0507-0.0989-0.0255-0.0254-0.09140.0051-0.0511-0.0522-0.054
M-score -1.61-2.28-3.10-2.39-1.85-2.72-2.52-2.21-2.32-2.68

Mercer International Inc Quarterly Data

Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14
DSRI 1.031.15751.02851.06780.9560.87240.96220.92751.02550.9839
GMI 2.97414.08283.25873.32041.71611.11451.27740.95940.61590.5793
AQI 2.90022.80681.32641.11840.99731.06310.9811.06241.16981.8701
SGI 0.84680.88340.93120.92531.0050.98260.9651.04351.03911.0785
DEPI 1.0260.97910.95370.89560.87450.92520.9670.9690.98520.8941
SGAI 1.23541.14791.05971.04461.01881.01681.02090.96430.95780.8991
LVGI 0.970.99160.99031.00821.02871.03461.03381.01270.94390.8891
TATA -0.022-0.0597-0.0522-0.0455-0.062-0.0516-0.0521-0.0568-0.0415-0.0224
M-score -0.91-0.39-1.45-1.45-2.46-2.79-2.67-2.77-2.73-2.36
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