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Mercury Systems Inc (NAS:MRCY)
Beneish M-Score
-2.34 (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 -2.34 suggests that the company is not a manipulator.

MRCY' s Beneish M-Score Range Over the Past 10 Years
Min: -3.36   Max: -1.54
Current: -2.34

-3.36
-1.54

During the past 13 years, the highest Beneish M-Score of Mercury Systems Inc was -1.54. The lowest was -3.36. And the median was -2.44.


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 * 2.0095+0.528 * 1.0162+0.404 * 1.2284+0.892 * 1.1503+0.115 * 1.4318
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9392+4.679 * -0.0265-0.327 * 3.9442
=-2.34

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

This Year (Jun16) TTM:Last Year (Jun15) TTM:
Accounts Receivable was $73.4 Mil.
Revenue was 85.43 + 65.898 + 60.417 + 58.409 = $270.2 Mil.
Gross Profit was 38.176 + 30.491 + 28.578 + 27.529 = $124.8 Mil.
Total Current Assets was $245.4 Mil.
Total Assets was $736.5 Mil.
Property, Plant and Equipment(Net PPE) was $28.3 Mil.
Depreciation, Depletion and Amortization(DDA) was $15.7 Mil.
Selling, General & Admin. Expense(SGA) was $53.0 Mil.
Total Current Liabilities was $67.6 Mil.
Long-Term Debt was $182.3 Mil.
Net Income was 8.463 + 4.526 + 4.793 + 1.96 = $19.7 Mil.
Non Operating Income was 2.056 + 0.144 + 0.083 + 0.071 = $2.4 Mil.
Cash Flow from Operations was 15.132 + 4.33 + 11.865 + 5.613 = $36.9 Mil.
Accounts Receivable was $31.8 Mil.
Revenue was 64.119 + 59.578 + 57.089 + 54.061 = $234.8 Mil.
Gross Profit was 31.267 + 27.918 + 27.035 + 23.999 = $110.2 Mil.
Total Current Assets was $175.8 Mil.
Total Assets was $386.9 Mil.
Property, Plant and Equipment(Net PPE) was $13.2 Mil.
Depreciation, Depletion and Amortization(DDA) was $13.8 Mil.
Selling, General & Admin. Expense(SGA) was $49.0 Mil.
Total Current Liabilities was $33.3 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)
=(73.427 / 270.154) / (31.765 / 234.847)
=0.27179683 / 0.13525827
=2.0095

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)
=(110.219 / 234.847) / (124.774 / 270.154)
=0.46932258 / 0.46186249
=1.0162

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 - (245.392 + 28.337) / 736.496) / (1 - (175.757 + 13.226) / 386.88)
=0.62833607 / 0.51152037
=1.2284

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
=270.154 / 234.847
=1.1503

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))
=(13.84 / (13.84 + 13.226)) / (15.742 / (15.742 + 28.337))
=0.51134264 / 0.35713151
=1.4318

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)
=(52.952 / 270.154) / (49.01 / 234.847)
=0.19600672 / 0.20868906
=0.9392

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)
=((182.275 + 67.644) / 736.496) / ((0 + 33.285) / 386.88)
=0.33933518 / 0.08603443
=3.9442

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
=(19.742 - 2.354 - 36.94) / 736.496
=-0.0265

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 -2.34 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

Jun07Jun08Jun09Jun10Jun11Jun12Jun13Jun14Jun15Jun16
DSRI 1.10560.94620.85751.35911.06550.830.92591.19780.75042.0095
GMI 1.06460.9731.03580.99090.99151.00631.40270.88650.96721.0162
AQI 1.06251.00040.70651.0210.93331.48081.35850.93440.95931.2284
SGI 0.94870.87570.99331.05761.14451.03660.81931.07461.12511.1503
DEPI 0.64440.8941.13591.35231.09490.86380.77771.03581.02591.4318
SGAI 1.07980.81210.81680.95170.98140.92731.20170.91220.81140.9392
LVGI 1.04221.07370.56140.51750.66010.94080.85911.07060.97643.9442
TATA -0.0837-0.1497-0.06030.0509-0.041-0.0284-0.0318-0.0728-0.0576-0.0265
M-score -2.83-3.36-2.81-1.65-2.39-2.52-2.51-2.66-2.86-2.34

Mercury Systems Inc Quarterly Data

Mar14Jun14Sep14Dec14Mar15Jun15Sep15Dec15Mar16Jun16
DSRI 1.19851.19780.92231.37371.2380.75041.0590.67280.74562.0095
GMI 0.95560.88650.88530.95630.97320.96720.96360.96290.97311.0162
AQI 0.96060.93440.92140.88710.87540.95930.8890.95620.96591.2284
SGI 0.94951.07461.08461.10971.14541.12511.12791.11141.10891.1503
DEPI 0.02760.08530.12350.135533.454512.4538.79147.55261.07631.4318
SGAI 0.99610.91220.8730.84210.83140.81140.83840.87060.89690.9392
LVGI 1.16241.07061.2231.5561.18410.97641.17830.99060.96753.9442
TATA 0.12540.11610.12360.1221-0.0664-0.0576-0.0606-0.0567-0.0425-0.0265
M-score -1.96-1.89-2.14-1.791.19-1.54-1.79-2.21-2.81-2.34
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