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Mercury Systems Inc (NAS:MRCY)
Beneish M-Score
-2.95 (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 -2.95 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: -2.95

-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 * 0.6728+0.528 * 0.9629+0.404 * 0.9562+0.892 * 1.1114+0.115 * 1.0666
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.8706+4.679 * -0.0567-0.327 * 0.9906
=-2.95

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

This Year (Dec15) TTM:Last Year (Dec14) TTM:
Accounts Receivable was $35.5 Mil.
Revenue was 60.417 + 58.409 + 64.119 + 59.578 = $242.5 Mil.
Gross Profit was 28.578 + 27.529 + 31.267 + 27.918 = $115.3 Mil.
Total Current Assets was $199.0 Mil.
Total Assets was $408.1 Mil.
Property, Plant and Equipment(Net PPE) was $13.3 Mil.
Depreciation, Depletion and Amortization(DDA) was $13.2 Mil.
Selling, General & Admin. Expense(SGA) was $48.8 Mil.
Total Current Liabilities was $41.4 Mil.
Long-Term Debt was $0.0 Mil.
Net Income was 4.793 + 1.96 + 5.93 + 3.675 = $16.4 Mil.
Non Operating Income was 0.083 + 0.071 + 0.054 + 0.007 = $0.2 Mil.
Cash Flow from Operations was 11.865 + 5.613 + 12.687 + 9.114 = $39.3 Mil.
Accounts Receivable was $47.4 Mil.
Revenue was 57.089 + 54.061 + 53.678 + 53.393 = $218.2 Mil.
Gross Profit was 27.035 + 23.999 + 24.481 + 24.376 = $99.9 Mil.
Total Current Assets was $179.0 Mil.
Total Assets was $385.4 Mil.
Property, Plant and Equipment(Net PPE) was $13.0 Mil.
Depreciation, Depletion and Amortization(DDA) was $14.7 Mil.
Selling, General & Admin. Expense(SGA) was $50.4 Mil.
Total Current Liabilities was $39.5 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)
=(35.468 / 242.523) / (47.432 / 218.221)
=0.14624592 / 0.21735763
=0.6728

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)
=(27.529 / 218.221) / (28.578 / 242.523)
=0.45775155 / 0.47538584
=0.9629

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 - (198.978 + 13.324) / 408.092) / (1 - (179.035 + 12.968) / 385.367)
=0.47976927 / 0.50176585
=0.9562

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
=242.523 / 218.221
=1.1114

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))
=(14.73 / (14.73 + 12.968)) / (13.249 / (13.249 + 13.324))
=0.53180735 / 0.49858879
=1.0666

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)
=(48.752 / 242.523) / (50.387 / 218.221)
=0.20102011 / 0.23089895
=0.8706

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 + 41.392) / 408.092) / ((0 + 39.457) / 385.367)
=0.10142811 / 0.10238811
=0.9906

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
=(16.358 - 0.215 - 39.279) / 408.092
=-0.0567

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 -2.95 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 0.91311.10560.85740.94631.35911.06550.80340.88991.28760.7504
GMI 1.10631.06460.93641.07630.99090.99151.02171.4040.87230.9672
AQI 1.41961.06251.00040.70651.0210.93331.48081.35850.93440.907
SGI 0.91530.94870.96630.90011.05761.14451.07090.85250.99971.1251
DEPI 0.70090.64440.8941.13591.35231.09490.86380.77771.03581.0259
SGAI 1.33741.07980.95510.69460.95170.98140.92231.18170.93260.8114
LVGI 1.00231.04221.07370.56140.51750.66010.94080.85911.07060.9686
TATA -0.0989-0.0837-0.1482-0.06030.0509-0.0412-0.0284-0.0318-0.0728-0.0572
M-score -2.97-2.83-3.40-2.77-1.65-2.39-2.51-2.51-2.66-2.87

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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