Switch to:
GuruFocus has detected 6 Warning Signs with Mercury Systems Inc $MRCY.
More than 500,000 people have already joined GuruFocus to track the stocks they follow and exchange investment ideas.
Mercury Systems Inc (NAS:MRCY)
Beneish M-Score
-2.48 (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 -2.48 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: -2.48

-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 -2.59.


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 * 1.1412+0.528 * 1.0614+0.404 * 1.0547+0.892 * 1.5207+0.115 * 1.3046
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.95+4.679 * -0.0433-0.327 * 2.5111
=-2.48

* 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 $68.2 Mil.
Revenue was 107.317 + 98.014 + 87.649 + 85.43 = $378.4 Mil.
Gross Profit was 50.783 + 47.389 + 39.444 + 35.331 = $172.9 Mil.
Total Current Assets was $448.4 Mil.
Total Assets was $981.4 Mil.
Property, Plant and Equipment(Net PPE) was $47.4 Mil.
Depreciation, Depletion and Amortization(DDA) was $29.0 Mil.
Selling, General & Admin. Expense(SGA) was $71.6 Mil.
Total Current Liabilities was $73.4 Mil.
Long-Term Debt was $176.1 Mil.
Net Income was 7.048 + 5.204 + 3.819 + 7.489 = $23.6 Mil.
Non Operating Income was 0.279 + -0.087 + 0.6 + 2.056 = $2.8 Mil.
Cash Flow from Operations was 24.889 + 14.238 + 10.283 + 13.748 = $63.2 Mil.
Accounts Receivable was $39.3 Mil.
Revenue was 65.898 + 60.417 + 58.409 + 64.119 = $248.8 Mil.
Gross Profit was 31.402 + 29.739 + 28.302 + 31.267 = $120.7 Mil.
Total Current Assets was $206.6 Mil.
Total Assets was $414.8 Mil.
Property, Plant and Equipment(Net PPE) was $13.5 Mil.
Depreciation, Depletion and Amortization(DDA) was $13.3 Mil.
Selling, General & Admin. Expense(SGA) was $49.6 Mil.
Total Current Liabilities was $42.0 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)
=(68.227 / 378.41) / (39.314 / 248.843)
=0.18029915 / 0.15798716
=1.1412

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)
=(120.71 / 248.843) / (172.947 / 378.41)
=0.48508497 / 0.45703602
=1.0614

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 - (448.353 + 47.356) / 981.376) / (1 - (206.635 + 13.512) / 414.756)
=0.49488371 / 0.46921322
=1.0547

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
=378.41 / 248.843
=1.5207

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))
=(13.272 / (13.272 + 13.512)) / (29.003 / (29.003 + 47.356))
=0.49551971 / 0.37982425
=1.3046

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)
=(71.649 / 378.41) / (49.597 / 248.843)
=0.18934225 / 0.19931041
=0.95

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)
=((176.137 + 73.365) / 981.376) / ((0 + 41.992) / 414.756)
=0.25423691 / 0.10124507
=2.5111

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
=(23.56 - 2.848 - 63.158) / 981.376
=-0.0433

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 -2.48 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.

Mercury Systems Inc Annual Data

Jun07Jun08Jun09Jun10Jun11Jun12Jun13Jun14Jun15Jun16
DSRI 1.10560.95290.83271.38981.06550.830.92591.19780.75042.0095
GMI 1.06460.96911.03060.99990.99151.00631.40270.88650.96721.0162
AQI 1.06251.00040.70651.0210.93331.48081.35850.93440.95931.2284
SGI 0.94870.86951.02291.03431.14451.03660.81931.07461.12511.1503
DEPI 0.64440.8941.13591.35231.09490.86380.77771.03581.02591.4318
SGAI 1.07980.81680.8510.90820.98140.92731.20170.91220.81140.9392
LVGI 1.04221.07370.56140.51750.66010.94080.85911.07060.97643.9442
TATA -0.0837-0.1498-0.06130.0509-0.041-0.0284-0.0318-0.0728-0.0576-0.0265
M-score -2.83-3.36-2.82-1.63-2.39-2.52-2.51-2.66-2.86-2.34

Mercury Systems Inc Quarterly Data

Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16Dec16Mar17
DSRI 1.37371.2380.75041.0590.67280.74562.00951.18261.39661.1412
GMI 0.95630.97320.96720.95710.9470.95021.01621.05471.06071.0614
AQI 0.88710.87540.95930.8890.95620.96591.22841.36361.35521.0547
SGI 1.10971.14541.12511.12791.11141.10891.15031.25171.38951.5207
DEPI 0.95940.96821.02591.06171.06661.07631.43181.29471.30461.3046
SGAI 0.84210.83140.81140.83840.87060.89690.93920.95470.96110.95
LVGI 1.5561.18410.97641.17830.99060.96753.94423.0733.25342.5111
TATA -0.0611-0.0664-0.0576-0.0608-0.0572-0.0435-0.0265-0.0316-0.0324-0.0433
M-score -2.55-2.54-2.86-2.69-2.96-2.82-2.34-2.70-2.44-2.48
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)
FEEDBACK