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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: -6.03   Max: 0.14
Current: -3.1

-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 * 1.0908+0.528 * 0.6932+0.404 * 0.6201+0.892 * 0.9173+0.115 * 0.9651
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0784+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 + 282.682 = $1,175 Mil.
Gross Profit was 59.465 + 34.959 + 49.679 + 24.159 = $168 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 $79 Mil.
Selling, General & Admin. Expense(SGA) was $49 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 / 1175.169)
=0.12931806 / 0.11855827
=1.0908

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 / 1175.169) / (56.497 / 1078.001)
=0.14318111 / 0.20655268
=0.6932

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 / 1175.169
=0.9173

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))
=(79.317 / (79.317 + 923.993)) / (69.933 / (69.933 + 783.773))
=0.07905533 / 0.08191696
=0.9651

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) / (49.334 / 1175.169)
=0.04527269 / 0.04198034
=1.0784

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

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

Jun13Sep13Dec13Mar14Jun14Sep14Dec14Mar15Jun15Sep15
DSRI 0.98420.89990.92170.89540.9920.94340.99320.9141.16851.0908
GMI 1.71981.11941.27670.96250.61290.57780.45940.52960.59540.6932
AQI 0.99731.06310.9811.06241.16981.87012.01341.74631.45010.6201
SGI 0.97620.95251.01041.08091.07421.12481.07970.99530.97020.9173
DEPI 0.91340.95290.93250.9450.94390.85680.86730.81580.88270.9651
SGAI 1.02191.01711.02330.96480.9580.90030.86750.98440.97071.0784
LVGI 1.02871.03461.04761.01270.94390.88910.84120.94070.94821.0163
TATA -0.0602-0.0506-0.054-0.058-0.0429-0.0239-0.0312-0.0312-0.0092-0.0619
M-score -2.44-2.78-2.68-2.77-2.74-2.37-2.38-2.66-2.42-3.10
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