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Mercury Systems Inc (NAS:MRCY)
Beneish M-Score
-2.66 (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.

Mercury Systems Inc has a M-score of -2.66 suggests that the company is not a manipulator.

MRCY' s 10-Year Beneish M-Score Range
Min: -3.36   Max: -1.63
Current: -2.66

-3.36
-1.63

During the past 13 years, the highest Beneish M-Score of Mercury Systems Inc was -1.63. The lowest was -3.36. And the median was -2.66.


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 Mercury Systems 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 * 1.1978+0.528 * 0.8865+0.404 * 0.9344+0.892 * 1.0746+0.115 * 1.0358
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9122+4.679 * -0.0728-0.327 * 1.0706
=-2.66

* 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 $37.6 Mil.
Revenue was 46.199 + 55.5 + 53.09 + 53.94 = $208.7 Mil.
Gross Profit was 22.094 + 25.127 + 24.938 + 22.585 = $94.7 Mil.
Total Current Assets was $160.3 Mil.
Total Assets was $373.7 Mil.
Property, Plant and Equipment(Net PPE) was $14.1 Mil.
Depreciation, Depletion and Amortization(DDA) was $15.6 Mil.
Selling, General & Admin. Expense(SGA) was $53.7 Mil.
Total Current Liabilities was $32.9 Mil.
Long-Term Debt was $0.0 Mil.
Net Income was -7.546 + -0.578 + -1.045 + -2.256 = $-11.4 Mil.
Non Operating Income was 0.323 + 0.337 + 0.44 + 0.432 = $1.5 Mil.
Cash Flow from Operations was 2.509 + 2.201 + 7.358 + 2.173 = $14.2 Mil.
Accounts Receivable was $29.2 Mil.
Revenue was 40.876 + 54.123 + 49.804 + 49.428 = $194.2 Mil.
Gross Profit was 17.622 + 22.574 + 17.572 + 20.39 = $78.2 Mil.
Total Current Assets was $146.3 Mil.
Total Assets was $374.4 Mil.
Property, Plant and Equipment(Net PPE) was $14.5 Mil.
Depreciation, Depletion and Amortization(DDA) was $17.2 Mil.
Selling, General & Admin. Expense(SGA) was $54.8 Mil.
Total Current Liabilities was $30.8 Mil.
Long-Term Debt was $0.0 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)
=(37.625 / 208.729) / (29.229 / 194.231)
=0.18025765 / 0.15048576
=1.1978

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)
=(25.127 / 194.231) / (22.094 / 208.729)
=0.40239715 / 0.45390914
=0.8865

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 - (160.305 + 14.144) / 373.712) / (1 - (146.301 + 14.462) / 374.431)
=0.53319936 / 0.5706472
=0.9344

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
=208.729 / 194.231
=1.0746

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))
=(17.209 / (17.209 + 14.462)) / (15.608 / (15.608 + 14.144))
=0.54336775 / 0.52460339
=1.0358

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)
=(53.685 / 208.729) / (54.764 / 194.231)
=0.25719953 / 0.28195293
=0.9122

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)
=((0 + 32.93) / 373.712) / ((0 + 30.818) / 374.431)
=0.08811598 / 0.08230622
=1.0706

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
=(-11.425 - 1.532 - 14.241) / 373.712
=-0.0728

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.

Mercury Systems Inc has a M-score of -2.66 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.

Mercury Systems Inc Annual Data

Jun05Jun06Jun07Jun08Jun09Jun10Jun11Jun12Jun13Jun14
DSRI 0.73640.91311.10560.94620.85751.35911.06550.80340.95661.1978
GMI 1.0171.10631.06460.9731.03580.99090.99151.02171.38150.8865
AQI 1.31641.41961.06251.00040.70651.0210.93331.48081.35850.9344
SGI 1.34790.91530.94870.87570.99331.05761.14451.07090.7931.0746
DEPI 0.8850.70090.64440.8941.13591.35231.09490.86380.77771.0358
SGAI 0.95761.33741.07980.81210.81680.95170.98140.92231.20820.9122
LVGI 0.9371.00231.04221.07370.56140.51750.66010.94080.85911.0706
TATA -0.0197-0.0989-0.0782-0.1497-0.06030.0509-0.0412-0.0284-0.0318-0.0728
M-score -2.35-2.97-2.80-3.36-2.81-1.65-2.39-2.51-2.52-2.66

Mercury Systems Inc Quarterly Data

Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14
DSRI 0.82520.80340.97780.79040.88370.95661.07060.99151.19841.1978
GMI 0.97941.02171.10811.27781.35231.38151.27721.04760.95510.8865
AQI 1.45111.48082.0661.32451.34631.35850.98290.9820.96060.9344
SGI 1.06141.07091.08640.95340.87330.7930.81040.88970.94951.0746
DEPI 0.91060.86380.99450.91320.83860.77770.73040.87780.95321.0358
SGAI 0.97020.92230.93221.05771.1141.20821.17621.0721.01230.9122
LVGI 0.97550.94081.05680.88860.76920.85910.78370.71311.16241.0706
TATA -0.044-0.0284-0.017-0.0278-0.0102-0.0318-0.0517-0.0583-0.0635-0.0728
M-score -2.62-2.51-2.02-2.55-2.38-2.52-2.68-2.77-2.74-2.66
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