Switch to:
GuruFocus has detected 2 Warning Signs with Mercer International Inc $MERC.
More than 500,000 people have already joined GuruFocus to track the stocks they follow and exchange investment ideas.
Mercer International Inc (NAS:MERC)
Beneish M-Score
-3.04 (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.

Mercer International Inc has a M-score of -3.04 suggests that the company is not a manipulator.

MERC' s Beneish M-Score Range Over the Past 10 Years
Min: -15.01   Max: -0.35
Current: -3.04

-15.01
-0.35

During the past 13 years, the highest Beneish M-Score of Mercer International Inc was -0.35. The lowest was -15.01. And the median was -2.52.


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 Mercer International 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 * 1.0972+0.528 * 1.0143+0.404 * 0.4861+0.892 * 0.8942+0.115 * 0.8662
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0187+4.679 * -0.0683-0.327 * 1.0475
=-3.04

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

This Year (Mar17) TTM:Last Year (Mar16) TTM:
Accounts Receivable was $134.7 Mil.
Revenue was 242.784 + 221.694 + 237.941 + 218.145 = $920.6 Mil.
Gross Profit was 69.828 + 51.446 + 39.894 + 27.063 = $188.2 Mil.
Total Current Assets was $453.0 Mil.
Total Assets was $1,202.0 Mil.
Property, Plant and Equipment(Net PPE) was $734.6 Mil.
Depreciation, Depletion and Amortization(DDA) was $74.0 Mil.
Selling, General & Admin. Expense(SGA) was $42.5 Mil.
Total Current Liabilities was $98.8 Mil.
Long-Term Debt was $665.1 Mil.
Net Income was 9.726 + 18.489 + 11.926 + -4.241 = $35.9 Mil.
Non Operating Income was -9.9 + -2.359 + 0.005 + -0.409 = $-12.7 Mil.
Cash Flow from Operations was 53.385 + 29.603 + 36.436 + 11.277 = $130.7 Mil.
Accounts Receivable was $137.3 Mil.
Revenue was 253.843 + 237.828 + 270.893 + 266.936 = $1,029.5 Mil.
Gross Profit was 56.901 + 54.878 + 56.497 + 45.25 = $213.5 Mil.
Total Current Assets was $416.0 Mil.
Total Assets was $1,238.5 Mil.
Property, Plant and Equipment(Net PPE) was $791.9 Mil.
Depreciation, Depletion and Amortization(DDA) was $68.2 Mil.
Selling, General & Admin. Expense(SGA) was $46.6 Mil.
Total Current Liabilities was $123.1 Mil.
Long-Term Debt was $628.3 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)
=(134.743 / 920.564) / (137.344 / 1029.5)
=0.14637005 / 0.13340845
=1.0972

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)
=(213.526 / 1029.5) / (188.231 / 920.564)
=0.20740748 / 0.20447356
=1.0143

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 - (452.978 + 734.587) / 1201.99) / (1 - (415.994 + 791.893) / 1238.464)
=0.01200093 / 0.02468945
=0.4861

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
=920.564 / 1029.5
=0.8942

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))
=(68.165 / (68.165 + 791.893)) / (73.986 / (73.986 + 734.587))
=0.07925628 / 0.09150194
=0.8662

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)
=(42.486 / 920.564) / (46.641 / 1029.5)
=0.04615214 / 0.04530452
=1.0187

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)
=((665.076 + 98.792) / 1201.99) / ((628.27 + 123.08) / 1238.464)
=0.63550279 / 0.60667892
=1.0475

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
=(35.9 - -12.663 - 130.701) / 1201.99
=-0.0683

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.

Mercer International Inc has a M-score of -3.04 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 local exchange's currency.

Mercer International Inc Annual Data

Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15Dec16
DSRI 1.01611.04930.88561.11790.95651.11430.91790.99321.01621.1004
GMI 1.35912.50142.31150.10241.33241.5921.27660.45940.87011.2073
AQI 0.56040.20421.38560.77251.8531.32630.9812.02620.53540.6
SGI 1.28760.94560.88561.35631.03950.85681.01461.07970.87920.9017
DEPI 0.95730.96221.01320.94280.91231.04340.92940.86730.98670.9259
SGAI 1.38440.99141.05640.83221.17111.06551.02370.86751.09721.0681
LVGI 0.95891.12321.03290.8840.92080.99031.04760.83981.05190.997
TATA -0.0255-0.026-0.09140.0051-0.0548-0.0509-0.054-0.0317-0.065-0.089
M-score -2.37-2.18-2.29-2.54-2.23-2.30-2.68-2.37-3.17-2.96

Mercer International Inc Quarterly Data

Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16Dec16Mar17
DSRI 0.99320.9141.16851.09081.01621.10880.92791.06691.10041.0972
GMI 0.45940.52960.59540.69320.87010.92131.02171.09531.091.0143
AQI 2.02621.74631.45010.62010.53540.59030.58780.70880.60.4861
SGI 1.07970.99530.97020.91730.87920.91350.88450.87920.90170.8942
DEPI 0.86730.81580.88270.96510.98671.1160.99470.98660.92590.8662
SGAI 0.86750.98440.97071.07841.09721.04511.07370.99831.06811.0187
LVGI 0.83980.94070.94821.01631.05190.91450.97460.96470.9971.0475
TATA -0.0317-0.0312-0.0092-0.0619-0.065-0.0747-0.0944-0.0717-0.089-0.0683
M-score -2.37-2.66-2.42-3.10-3.17-2.98-3.25-2.92-3.03-3.04
Get WordPress Plugins for easy affiliate links on Stock Tickers and Guru Names | Earn affiliate commissions by embedding GuruFocus Charts
GuruFocus Affiliate Program: Earn up to $400 per referral. ( Learn More)

GF Chat

{{numOfNotice}}
FEEDBACK