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Mercury Systems Inc (NAS:MRCY)
Beneish M-Score
-2.78 (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 -2.78 suggests that the company is not a manipulator.

MRCY' s 10-Year Beneish M-Score Range
Min: -3.69   Max: -1.55
Current: -2.78

-3.69
-1.55

During the past 13 years, the highest Beneish M-Score of Mercury Systems Inc was -1.55. The lowest was -3.69. And the median was -2.56.


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 * 1.1569+0.528 * 0.9551+0.404 * 0.9606+0.892 * 0.9495+0.115 * 0.9532
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0123+4.679 * -0.0635-0.327 * 1.1624
=-2.78

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

This Year (Mar14) TTM:Last Year (Mar13) TTM:
Accounts Receivable was $52.1 Mil.
Revenue was 55.5 + 53.09 + 53.94 + 40.876 = $203.4 Mil.
Gross Profit was 25.127 + 24.938 + 22.585 + 17.622 = $90.3 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 $54.7 Mil.
Total Current Liabilities was $33.0 Mil.
Long-Term Debt was $0.0 Mil.
Net Income was -0.578 + -1.045 + -2.256 + -2.012 = $-5.9 Mil.
Non Operating Income was 0.337 + 0.44 + 0.432 + 0.079 = $1.3 Mil.
Cash Flow from Operations was 2.201 + 7.358 + 2.173 + 4.822 = $16.6 Mil.
Accounts Receivable was $47.5 Mil.
Revenue was 54.123 + 49.804 + 49.428 + 60.859 = $214.2 Mil.
Gross Profit was 22.574 + 17.572 + 20.39 + 30.264 = $90.8 Mil.
Total Current Assets was $142.3 Mil.
Total Assets was $376.4 Mil.
Property, Plant and Equipment(Net PPE) was $16.6 Mil.
Depreciation, Depletion and Amortization(DDA) was $16.1 Mil.
Selling, General & Admin. Expense(SGA) was $56.9 Mil.
Total Current Liabilities was $28.6 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)
=(52.145 / 203.406) / (47.467 / 214.214)
=0.2563592 / 0.22158682
=1.1569

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)
=(24.938 / 214.214) / (25.127 / 203.406)
=0.42387519 / 0.44380205
=0.9551

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 - (151.041 + 15.226) / 373.596) / (1 - (142.305 + 16.631) / 376.394)
=0.55495509 / 0.57774035
=0.9606

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
=203.406 / 214.214
=0.9495

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))
=(16.121 / (16.121 + 16.631)) / (16.257 / (16.257 + 15.226))
=0.49221422 / 0.51637392
=0.9532

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)
=(54.694 / 203.406) / (56.903 / 214.214)
=0.26889079 / 0.26563623
=1.0123

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 + 33.018) / 373.596) / ((0 + 28.617) / 376.394)
=0.08837889 / 0.07602937
=1.1624

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
=(-5.891 - 1.288 - 16.554) / 373.596
=-0.0635

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 -2.78 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

Jun04Jun05Jun06Jun07Jun08Jun09Jun10Jun11Jun12Jun13
DSRI 1.75880.73640.91311.10560.94620.95972.03980.64931.00721.1857
GMI 0.97341.0171.10631.06460.9731.03580.99090.99151.02171.3815
AQI 0.74641.31641.41961.06251.00040.70651.0210.93331.48081.3585
SGI 1.02971.34790.91530.94870.87570.99331.05761.14451.07090.793
DEPI 1.08310.8850.70090.64440.8941.13591.35231.09490.86380.7777
SGAI 0.9860.95761.33741.07980.81210.81680.95170.98140.92231.2082
LVGI 2.59220.9371.00231.04221.07370.56140.51750.66010.94080.8591
TATA -0.0084-0.0197-0.0989-0.0782-0.1497-0.06030.0509-0.041-0.0284-0.0318
M-score -2.42-2.35-2.97-2.80-3.36-2.71-1.02-2.77-2.32-2.31

Mercury Systems Inc Quarterly Data

Dec11Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14
DSRI 1.52091.04971.00721.20440.90741.09011.18571.17620.96341.1569
GMI 0.97420.97941.02171.10811.27781.35231.38151.27721.04760.9551
AQI 1.42551.45111.48082.0661.32451.34631.35850.98290.9820.9606
SGI 1.10851.06141.07091.08640.95340.87330.7930.81040.88970.9495
DEPI 0.95820.91060.86380.99450.91320.83860.77770.73040.87780.9532
SGAI 0.94830.97020.92230.93221.05771.1141.20821.17621.0721.0123
LVGI 0.83360.97550.94081.05680.88860.76920.85910.78370.71311.1624
TATA -0.0248-0.044-0.0284-0.0169-0.0278-0.0102-0.0318-0.0517-0.0583-0.0635
M-score -1.80-2.41-2.32-1.81-2.44-2.19-2.31-2.58-2.80-2.78
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