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Mercer International Inc (NAS:MERC)
Beneish M-Score
-2.73 (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 -2.73 suggests that the company is not a manipulator.

MERC' s 10-Year Beneish M-Score Range
Min: -6.06   Max: 0.15
Current: -2.73

-6.06
0.15

During the past 13 years, the highest Beneish M-Score of Mercer International Inc was 0.15. The lowest was -6.06. And the median was -2.43.


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 * 1.0336+0.528 * 0.6162+0.404 * 1.1698+0.892 * 1.031+0.115 * 0.9888
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.958+4.679 * -0.0415-0.327 * 0.9439
=-2.73

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

This Year (Jun14) TTM:Last Year (Jun13) TTM:
Accounts Receivable was $135 Mil.
Revenue was 285.192 + 305.685 + 263.174 + 274.092 = $1,128 Mil.
Gross Profit was 34.959 + 49.679 + 22.584 + 30.274 = $137 Mil.
Total Current Assets was $558 Mil.
Total Assets was $1,609 Mil.
Property, Plant and Equipment(Net PPE) was $1,007 Mil.
Depreciation, Depletion and Amortization(DDA) was $78 Mil.
Selling, General & Admin. Expense(SGA) was $50 Mil.
Total Current Liabilities was $179 Mil.
Long-Term Debt was $902 Mil.
Net Income was 0.571 + 21.041 + -9.432 + -2.996 = $9 Mil.
Non Operating Income was 2.467 + 3.234 + 4.463 + 2.901 = $13 Mil.
Cash Flow from Operations was 21.289 + 59.679 + -24.604 + 6.535 = $63 Mil.
Accounts Receivable was $126 Mil.
Revenue was 274.7 + 261.785 + 269.467 + 288.283 = $1,094 Mil.
Gross Profit was 11.07 + 24.351 + 24.524 + 22.234 = $82 Mil.
Total Current Assets was $464 Mil.
Total Assets was $1,528 Mil.
Property, Plant and Equipment(Net PPE) was $1,028 Mil.
Depreciation, Depletion and Amortization(DDA) was $79 Mil.
Selling, General & Admin. Expense(SGA) was $51 Mil.
Total Current Liabilities was $184 Mil.
Long-Term Debt was $904 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)
=(134.749 / 1128.143) / (126.454 / 1094.235)
=0.11944319 / 0.11556384
=1.0336

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)
=(49.679 / 1094.235) / (34.959 / 1128.143)
=0.07510178 / 0.12187817
=0.6162

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 - (557.96 + 1006.906) / 1608.828) / (1 - (464.346 + 1028.044) / 1528.084)
=0.02732548 / 0.02335866
=1.1698

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
=1128.143 / 1094.235
=1.031

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))
=(79.012 / (79.012 + 1028.044)) / (78.335 / (78.335 + 1006.906))
=0.07137128 / 0.07218212
=0.9888

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)
=(49.905 / 1128.143) / (50.527 / 1094.235)
=0.04423641 / 0.04617564
=0.958

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)
=((902.019 + 179.15) / 1608.828) / ((904.061 + 183.928) / 1528.084)
=0.67202274 / 0.71199554
=0.9439

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
=(9.184 - 13.065 - 62.899) / 1608.828
=-0.0415

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 -2.73 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 1.32940.74460.80810.99231.05580.82991.17121.00240.97420.9461
GMI 1.19910.79040.4511.35912.50142.31150.10191.32491.61011.2766
AQI 1.34180.94440.98830.56040.20421.30150.82241.8531.32640.981
SGI 1.37291.59461.5381.28760.94560.88561.34870.96240.9570.9866
DEPI 1.02630.61310.90890.95730.96221.01320.94280.97510.95370.9513
SGAI 1.10070.36040.77431.38440.99141.05640.83961.17391.05351.0237
LVGI 0.99590.95190.99890.95891.12321.03290.8840.92080.99031.0338
TATA 0.0016-0.0382-0.0869-0.0255-0.026-0.09140.0051-0.0511-0.0522-0.054
M-score -1.61-2.42-2.85-2.40-2.17-2.37-2.47-2.24-2.34-2.68

Mercer International Inc Quarterly Data

Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14
DSRI 1.04221.031.15751.00121.06020.94860.86550.95960.93351.0336
GMI 0.72362.97414.08283.25873.32151.71531.11491.27760.96010.6162
AQI 2.14372.90022.80681.32641.11840.99731.06310.9811.06241.1698
SGI 0.93740.84680.88340.93120.9321.01280.99040.97271.03681.031
DEPI 0.98391.0260.97910.95370.88940.87130.92190.96340.97890.9888
SGAI 1.16091.23541.14791.05971.04451.01861.01651.02050.96440.958
LVGI 0.94770.970.99160.99031.00821.02871.03461.03381.01270.9439
TATA -0.0257-0.022-0.0597-0.0522-0.0462-0.0625-0.0521-0.0526-0.0566-0.0415
M-score -2.31-0.91-0.39-1.47-1.45-2.46-2.79-2.67-2.77-2.73
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