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Mercury Systems Inc (NAS:MRCY)
Beneish M-Score
-2.81 (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 -2.81 suggests that the company is not a manipulator.

MRCY' s Beneish M-Score Range Over the Past 10 Years
Min: -3.69   Max: -1.63
Current: -2.81

-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 * 0.7456+0.528 * 0.9731+0.404 * 0.9659+0.892 * 1.1089+0.115 * 1.0763
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.8969+4.679 * -0.0425-0.327 * 0.9675
=-2.81

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

This Year (Mar16) TTM:Last Year (Mar15) TTM:
Accounts Receivable was $39.3 Mil.
Revenue was 65.898 + 60.417 + 58.409 + 64.119 = $248.8 Mil.
Gross Profit was 30.491 + 28.578 + 27.529 + 31.267 = $117.9 Mil.
Total Current Assets was $206.6 Mil.
Total Assets was $414.8 Mil.
Property, Plant and Equipment(Net PPE) was $13.5 Mil.
Depreciation, Depletion and Amortization(DDA) was $13.3 Mil.
Selling, General & Admin. Expense(SGA) was $49.6 Mil.
Total Current Liabilities was $42.0 Mil.
Long-Term Debt was $0.0 Mil.
Net Income was 4.526 + 4.793 + 1.96 + 5.93 = $17.2 Mil.
Non Operating Income was 0.144 + 0.083 + 0.071 + 0.054 = $0.4 Mil.
Cash Flow from Operations was 4.33 + 11.865 + 5.613 + 12.687 = $34.5 Mil.
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.



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)
=(39.314 / 248.843) / (47.552 / 224.406)
=0.15798716 / 0.21190164
=0.7456

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)
=(28.578 / 224.406) / (30.491 / 248.843)
=0.46091905 / 0.47365206
=0.9731

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 - (206.635 + 13.512) / 414.756) / (1 - (187.759 + 12.391) / 389.24)
=0.46921322 / 0.48579283
=0.9659

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
=248.843 / 224.406
=1.1089

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))
=(14.162 / (14.162 + 12.391)) / (13.272 / (13.272 + 13.512))
=0.5333484 / 0.49551971
=1.0763

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)
=(49.597 / 248.843) / (49.866 / 224.406)
=0.19931041 / 0.22221331
=0.8969

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 + 41.992) / 414.756) / ((0 + 40.733) / 389.24)
=0.10124507 / 0.10464752
=0.9675

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
=(17.209 - 0.352 - 34.495) / 414.756
=-0.0425

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 -2.81 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

Jun06Jun07Jun08Jun09Jun10Jun11Jun12Jun13Jun14Jun15
DSRI 0.88541.1070.8830.94631.35911.06550.80340.88991.28760.7504
GMI 1.12351.060.9261.07630.99090.99151.02171.4040.87230.9672
AQI 1.41961.06251.00040.70651.0210.93331.48081.35850.93440.907
SGI 0.94380.94740.93830.90011.05761.14451.07090.85250.99971.1251
DEPI 0.74630.64440.8941.13591.35231.09490.86380.77771.03581.0259
SGAI 1.30321.07610.98360.69460.95170.98140.92231.18170.93260.8114
LVGI 1.00231.04221.07370.56140.51750.66010.94080.85911.07060.9686
TATA -0.0989-0.0922-0.1482-0.06030.0509-0.0412-0.0284-0.0318-0.0728-0.0572
M-score -2.95-2.87-3.41-2.77-1.65-2.39-2.51-2.51-2.66-2.87

Mercury Systems Inc Quarterly Data

Dec13Mar14Jun14Sep14Dec14Mar15Jun15Sep15Dec15Mar16
DSRI 0.98331.19851.19780.92231.37371.2380.75041.0590.67280.7456
GMI 1.05190.95560.88650.88530.95630.97320.96720.96360.96290.9731
AQI 0.9820.96060.93440.92140.88710.87540.9070.8890.95620.9659
SGI 0.89710.94951.07461.08461.10971.14541.12511.12791.11141.1089
DEPI 0.87780.95321.03581.02290.95940.96821.02591.06171.06661.0763
SGAI 1.06070.99610.91220.8730.84210.83140.81140.83840.87060.8969
LVGI 0.71311.16241.07061.2231.5561.18410.96861.17830.99060.9675
TATA -0.0583-0.0635-0.0728-0.0637-0.0611-0.0664-0.0572-0.0606-0.0567-0.0425
M-score -2.77-2.74-2.66-2.91-2.55-2.54-2.87-2.68-2.95-2.81
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