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Mercury Systems Inc (NAS:MRCY)
Beneish M-Score
-2.92 (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 -2.92 suggests that the company is not a manipulator.

MRCY' s 10-Year Beneish M-Score Range
Min: -3.69   Max: -1.63
Current: -2.92

-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 -2.63.


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 * 0.9365+0.528 * 0.8812+0.404 * 0.9214+0.892 * 1.0681+0.115 * 1.0229
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.8731+4.679 * -0.0637-0.327 * 1.223
=-2.92

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

This Year (Sep14) TTM:Last Year (Sep13) TTM:
Accounts Receivable was $35.2 Mil.
Revenue was 54.061 + 46.199 + 55.5 + 53.09 = $208.9 Mil.
Gross Profit was 23.999 + 22.094 + 25.127 + 24.938 = $96.2 Mil.
Total Current Assets was $166.1 Mil.
Total Assets was $377.0 Mil.
Property, Plant and Equipment(Net PPE) was $13.3 Mil.
Depreciation, Depletion and Amortization(DDA) was $15.1 Mil.
Selling, General & Admin. Expense(SGA) was $50.9 Mil.
Total Current Liabilities was $34.1 Mil.
Long-Term Debt was $0.0 Mil.
Net Income was 0.499 + -7.546 + -0.578 + -1.045 = $-8.7 Mil.
Non Operating Income was -0.006 + 0.323 + 0.337 + 0.44 = $1.1 Mil.
Cash Flow from Operations was 2.178 + 2.509 + 2.201 + 7.358 = $14.2 Mil.
Accounts Receivable was $35.1 Mil.
Revenue was 50.726 + 40.876 + 54.123 + 49.804 = $195.5 Mil.
Gross Profit was 21.562 + 17.622 + 22.574 + 17.572 = $79.3 Mil.
Total Current Assets was $145.3 Mil.
Total Assets was $370.9 Mil.
Property, Plant and Equipment(Net PPE) was $14.6 Mil.
Depreciation, Depletion and Amortization(DDA) was $17.3 Mil.
Selling, General & Admin. Expense(SGA) was $54.6 Mil.
Total Current Liabilities was $27.4 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)
=(35.155 / 208.85) / (35.143 / 195.529)
=0.16832655 / 0.17973293
=0.9365

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)
=(22.094 / 195.529) / (23.999 / 208.85)
=0.40571987 / 0.46041657
=0.8812

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 - (166.052 + 13.343) / 376.99) / (1 - (145.343 + 14.565) / 370.885)
=0.52413857 / 0.56884749
=0.9214

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
=208.85 / 195.529
=1.0681

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))
=(17.33 / (17.33 + 14.565)) / (15.118 / (15.118 + 13.343))
=0.54334535 / 0.53118302
=1.0229

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)
=(50.874 / 208.85) / (54.552 / 195.529)
=0.24359109 / 0.27899698
=0.8731

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 + 34.084) / 376.99) / ((0 + 27.417) / 370.885)
=0.09041089 / 0.07392318
=1.223

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
=(-8.67 - 1.094 - 14.246) / 376.99
=-0.0637

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 -2.92 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

Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14
DSRI 0.80340.97780.79040.88370.95661.08821.00751.21761.21660.9365
GMI 1.02171.10811.27781.35231.38151.27271.04310.95080.88240.8812
AQI 1.48082.0661.32451.34631.35850.98290.9820.96060.93440.9214
SGI 1.07091.08640.95340.87330.7930.79730.87550.93451.05811.0681
DEPI 0.86380.99450.91320.83860.77770.73040.87780.95321.03581.0229
SGAI 0.92230.93221.05771.1141.20821.17871.07411.01380.9130.8731
LVGI 0.94081.05680.88860.76920.85910.78370.71311.16241.07061.223
TATA -0.0284-0.0169-0.0278-0.0102-0.0318-0.0517-0.0583-0.0635-0.0728-0.0637
M-score -2.51-2.02-2.55-2.38-2.52-2.68-2.77-2.74-2.66-2.92
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