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Mercer International Inc (NAS:MERC)
Beneish M-Score
-2.86 (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 -2.86 suggests that the company is not a manipulator.

MERC' s Beneish M-Score Range Over the Past 10 Years
Min: -5.88   Max: 0.27
Current: -2.86

-5.88
0.27

During the past 13 years, the highest Beneish M-Score of Mercer International Inc was 0.27. The lowest was -5.88. And the median was -2.46.


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 * 1.0669+0.528 * 1.2106+0.404 * 0.7088+0.892 * 0.8792+0.115 * 0.9866
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9983+4.679 * -0.0717-0.327 * 0.9647
=-2.86

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

This Year (Sep16) TTM:Last Year (Sep15) TTM:
Accounts Receivable was $130.8 Mil.
Revenue was 237.941 + 218.145 + 253.843 + 237.828 = $947.8 Mil.
Gross Profit was 39.894 + 27.063 + 39.869 + 54.878 = $161.7 Mil.
Total Current Assets was $429.4 Mil.
Total Assets was $1,233.4 Mil.
Property, Plant and Equipment(Net PPE) was $779.6 Mil.
Depreciation, Depletion and Amortization(DDA) was $70.6 Mil.
Selling, General & Admin. Expense(SGA) was $42.8 Mil.
Total Current Liabilities was $119.2 Mil.
Long-Term Debt was $647.2 Mil.
Net Income was 11.926 + -4.241 + 8.769 + 21.696 = $38.2 Mil.
Non Operating Income was 0.005 + -0.409 + 0.059 + -1.542 = $-1.9 Mil.
Cash Flow from Operations was 36.436 + 11.277 + 63.466 + 17.251 = $128.4 Mil.
Accounts Receivable was $139.4 Mil.
Revenue was 270.893 + 266.936 + 257.547 + 282.625 = $1,078.0 Mil.
Gross Profit was 56.497 + 45.25 + 55.295 + 65.622 = $222.7 Mil.
Total Current Assets was $453.1 Mil.
Total Assets was $1,272.4 Mil.
Property, Plant and Equipment(Net PPE) was $783.8 Mil.
Depreciation, Depletion and Amortization(DDA) was $69.9 Mil.
Selling, General & Admin. Expense(SGA) was $48.8 Mil.
Total Current Liabilities was $136.1 Mil.
Long-Term Debt was $683.4 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)
=(130.76 / 947.757) / (139.405 / 1078.001)
=0.13796785 / 0.12931806
=1.0669

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)
=(222.664 / 1078.001) / (161.704 / 947.757)
=0.20655268 / 0.17061757
=1.2106

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 - (429.364 + 779.606) / 1233.411) / (1 - (453.07 + 783.773) / 1272.417)
=0.01981578 / 0.02795782
=0.7088

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
=947.757 / 1078.001
=0.8792

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))
=(69.933 / (69.933 + 783.773)) / (70.589 / (70.589 + 779.606))
=0.08191696 / 0.08302684
=0.9866

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)
=(42.834 / 947.757) / (48.804 / 1078.001)
=0.04519513 / 0.04527269
=0.9983

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)
=((647.197 + 119.218) / 1233.411) / ((683.439 + 136.114) / 1272.417)
=0.62137844 / 0.64409152
=0.9647

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
=(38.15 - -1.887 - 128.43) / 1233.411
=-0.0717

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 -2.86 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 local exchange's currency.

Mercer International Inc Annual Data

Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15
DSRI 0.7391.01611.04930.88561.12421.0331.00070.94110.99321.0162
GMI 0.4511.35912.50142.31150.10191.32491.61011.27660.45940.8701
AQI 0.98830.56040.20421.30150.82241.8531.32640.9812.01340.5388
SGI 1.5381.28760.94560.88561.34870.96240.9570.98661.07970.8792
DEPI 0.90890.95730.96221.01320.94280.97510.95370.95130.86730.9867
SGAI 0.77431.38440.99141.05640.83961.17391.05351.02370.86751.0972
LVGI 0.99890.95891.12321.03290.8840.92080.99031.03380.85251.0501
TATA -0.0869-0.0255-0.026-0.09140.0051-0.0511-0.0522-0.054-0.0312-0.065
M-score -2.91-2.37-2.18-2.32-2.52-2.21-2.32-2.68-2.38-3.17

Mercer International Inc Quarterly Data

Jun14Sep14Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16
DSRI 1.02550.98390.9720.90151.15361.07261.01621.10880.92791.0669
GMI 0.61590.57930.46080.53250.59890.69830.87011.00111.11931.2106
AQI 1.16981.87012.01341.74631.45010.62010.53880.59030.58780.7088
SGI 1.03911.07851.10321.00910.98280.93280.87920.91350.88450.8792
DEPI 0.97380.89130.85050.80560.87170.94920.98671.1160.99470.9866
SGAI 0.95780.89910.86660.98460.97091.07991.09721.04511.07370.9983
LVGI 0.94390.88910.85250.94070.94821.01631.05010.91450.97460.9647
TATA -0.0415-0.0224-0.0312-0.0312-0.0092-0.0619-0.065-0.0747-0.0944-0.0717
M-score -2.73-2.36-2.38-2.65-2.42-3.10-3.17-2.94-3.20-2.86
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