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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 -2.79 suggests that the company is not a manipulator.
During the past 13 years, the highest Beneish M-Score of Mercury Systems Inc was -0.99. The lowest was -3.69. And the median was -2.59.
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 * 0.8986||+||0.528 * 1.0682||+||0.404 * 0.982||+||0.892 * 0.9538||+||0.115 * 0.8778|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0507||+||4.679 * -0.0583||-||0.327 * 0.7131|
|This Year (Dec13) TTM:||Last Year (Dec12) TTM:|
|Accounts Receivable was $41.0 Mil.|
Revenue was 53.09 + 53.94 + 55.436 + 54.123 = $216.6 Mil.
Gross Profit was 24.938 + 22.585 + 22.132 + 22.574 = $92.2 Mil.
Total Current Assets was $144.5 Mil.
Total Assets was $369.7 Mil.
Property, Plant and Equipment(Net PPE) was $16.1 Mil.
Depreciation, Depletion and Amortization(DDA) was $16.8 Mil.
Selling, General & Admin. Expense(SGA) was $58.3 Mil.
Total Current Liabilities was $24.3 Mil.
Long-Term Debt was $0.0 Mil.
Net Income was -1.045 + -2.256 + -2.012 + 0.788 = $-4.5 Mil.
Non Operating Income was 0.44 + 0.432 + 0.079 + 0.024 = $1.0 Mil.
Cash Flow from Operations was 7.358 + 2.173 + 4.822 + 1.697 = $16.1 Mil.
|Accounts Receivable was $47.8 Mil.
Revenue was 49.804 + 49.428 + 60.859 + 66.989 = $227.1 Mil.
Gross Profit was 17.572 + 20.39 + 30.264 + 35.063 = $103.3 Mil.
Total Current Assets was $143.8 Mil.
Total Assets was $382.1 Mil.
Property, Plant and Equipment(Net PPE) was $18.3 Mil.
Depreciation, Depletion and Amortization(DDA) was $14.8 Mil.
Selling, General & Admin. Expense(SGA) was $58.2 Mil.
Total Current Liabilities was $35.3 Mil.
Long-Term Debt was $0.0 Mil.
1. DSRI = Days Sales in Receivables Index
A large increase in DSR could be indicative of revenue inflation.
|DSRI||=||(Receivables_t / Revenue_t)||/||(Receivables_t-1 / Revenue_t-1)|
|=||(41.005 / 216.589)||/||(47.842 / 227.08)|
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.
|=||(GrossProfit_t-1 / Revenue_t-1)||/||(GrossProfit_t / Revenue_t)|
|=||(22.585 / 227.08)||/||(24.938 / 216.589)|
3. AQI = Asset Quality Index
AQI is the ratio of asset quality in year t to year t-1.
|AQI||=||(1 - (CurrentAssets_t + PPE_t) / TotalAssets_t)||/||(1 - (CurrentAssets_t-1 + PPE_t-1) / TotalAssets_t-1)|
|=||(1 - (144.467 + 16.145) / 369.742)||/||(1 - (143.78 + 18.261) / 382.139)|
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.
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))|
|=||(14.81 / (14.81 + 18.261))||/||(16.817 / (16.817 + 16.145))|
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)|
|=||(58.326 / 216.589)||/||(58.202 / 227.08)|
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 + 24.33) / 369.742)||/||((0 + 35.262) / 382.139)|
8. TATA = Total Accruals to Total Assets
Total accruals calculated as the change in working capital accounts other than cash less depreciation.
|=||(NetIncome_t - NonOperatingIncome_t||-||CashFlowsfromOperations_t)||/||TotalAssets_t|
|=||(-4.525 - 0.975||-||16.05)||/||369.742|
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 -2.79 suggests that the company will not be a manipulator.
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
Mercury Systems Inc Annual Data
Mercury Systems Inc Quarterly Data