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Mercury Systems Inc (NAS:MRCY)
Beneish M-Score
-2.54 (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 -2.54 suggests that the company is not a manipulator.

MRCY' s 10-Year Beneish M-Score Range
Min: -3.69   Max: -1.63
Current: -2.54

-3.69
-1.63

During the past 13 years, the highest Beneish M-Score of Mercury Systems Inc was -1.63. The lowest was -3.69. And the median was -2.62.


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 * 1.238+0.528 * 0.9732+0.404 * 0.8754+0.892 * 1.1454+0.115 * 0.9682
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.8314+4.679 * -0.0664-0.327 * 1.1841
=-2.54

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

This Year (Mar15) TTM:Last Year (Mar14) TTM:
Accounts Receivable was $47.6 Mil.
Revenue was 59.578 + 57.089 + 54.061 + 53.678 = $224.4 Mil.
Gross Profit was 27.918 + 27.035 + 23.999 + 24.481 = $103.4 Mil.
Total Current Assets was $187.8 Mil.
Total Assets was $389.2 Mil.
Property, Plant and Equipment(Net PPE) was $12.4 Mil.
Depreciation, Depletion and Amortization(DDA) was $14.2 Mil.
Selling, General & Admin. Expense(SGA) was $49.9 Mil.
Total Current Liabilities was $40.7 Mil.
Long-Term Debt was $0.0 Mil.
Net Income was 3.675 + 0.265 + 0.499 + -7.546 = $-3.1 Mil.
Non Operating Income was 0.007 + 0.398 + -0.006 + 0.323 = $0.7 Mil.
Cash Flow from Operations was 9.114 + 8.228 + 2.178 + 2.509 = $22.0 Mil.
Accounts Receivable was $33.5 Mil.
Revenue was 53.393 + 50.932 + 50.726 + 40.876 = $195.9 Mil.
Gross Profit was 24.376 + 24.325 + 21.562 + 17.622 = $87.9 Mil.
Total Current Assets was $151.0 Mil.
Total Assets was $373.6 Mil.
Property, Plant and Equipment(Net PPE) was $15.2 Mil.
Depreciation, Depletion and Amortization(DDA) was $16.3 Mil.
Selling, General & Admin. Expense(SGA) was $52.4 Mil.
Total Current Liabilities was $33.0 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)
=(47.552 / 224.406) / (33.535 / 195.927)
=0.21190164 / 0.17116069
=1.238

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)
=(27.035 / 195.927) / (27.918 / 224.406)
=0.44855992 / 0.46091905
=0.9732

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 - (187.759 + 12.391) / 389.24) / (1 - (151.041 + 15.226) / 373.596)
=0.48579283 / 0.55495509
=0.8754

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
=224.406 / 195.927
=1.1454

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))
=(16.257 / (16.257 + 15.226)) / (14.162 / (14.162 + 12.391))
=0.51637392 / 0.5333484
=0.9682

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)
=(49.866 / 224.406) / (52.367 / 195.927)
=0.22221331 / 0.26727812
=0.8314

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 + 40.733) / 389.24) / ((0 + 33.018) / 373.596)
=0.10464752 / 0.08837889
=1.1841

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
=(-3.107 - 0.722 - 22.029) / 389.24
=-0.0664

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 -2.54 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 -0.0197-0.0989-0.0782-0.1497-0.06030.0509-0.041-0.0284-0.0318-0.0728
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

Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14Dec14Mar15
DSRI 0.79040.88370.95661.08821.01861.24411.19780.92231.37371.238
GMI 1.27781.35231.38151.27271.03910.9450.88650.88530.95630.9732
AQI 1.32451.34631.35850.98290.9820.96060.93440.92140.88710.8754
SGI 0.95340.87330.7930.79730.8660.91461.07461.08461.10971.1454
DEPI 0.91320.83860.77770.73040.87780.95321.03581.02290.95940.9682
SGAI 1.05771.1141.20821.17871.06981.00620.91220.8730.84210.8314
LVGI 0.88860.76920.85910.78370.71311.16241.07061.2231.5561.1841
TATA -0.0278-0.0102-0.0318-0.0517-0.0583-0.0635-0.0728-0.0637-0.0611-0.0664
M-score -2.55-2.38-2.52-2.68-2.77-2.73-2.66-2.91-2.55-2.54
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