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Merck Beneish M-Score

: -2.39 (As of Today)
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The zones of discrimination for M-Score is as such:

An M-Score of equal or less than -1.78 suggests that the company is unlikely to be a manipulator.
An M-Score of greater than -1.78 signals that the company is likely to be a manipulator.

Good Sign:

Beneish M-Score -2.39 no higher than -1.78, which implies that the company is unlikely to be a manipulator.

The historical rank and industry rank for Merck's Beneish M-Score or its related term are showing as below:

MRK' s Beneish M-Score Range Over the Past 10 Years
Min: -3.43   Med: -2.71   Max: -0.74
Current: -2.39

During the past 13 years, the highest Beneish M-Score of Merck was -0.74. The lowest was -3.43. And the median was -2.71.


Merck Beneish M-Score Historical Data

The historical data trend for Merck's Beneish M-Score can be seen below:

* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD.
* For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.

* Premium members only.

Merck Annual Data
Trend Dec12 Dec13 Dec14 Dec15 Dec16 Dec17 Dec18 Dec19 Dec20 Dec21
Beneish M-Score
Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only -2.72 -2.79 -2.71 -2.66 -2.24

Merck Quarterly Data
Sep17 Dec17 Mar18 Jun18 Sep18 Dec18 Mar19 Jun19 Sep19 Dec19 Mar20 Jun20 Sep20 Dec20 Mar21 Jun21 Sep21 Dec21 Mar22 Jun22
Beneish M-Score Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only -2.70 -2.75 -2.24 -2.39 -

Competitive Comparison

For the Drug Manufacturers - General subindustry, Merck's Beneish M-Score, along with its competitors' market caps and Beneish M-Score data, can be viewed below:

* Competitive companies are chosen from companies within the same industry, with headquarter located in same country, with closest market capitalization; x-axis shows the market cap, and y-axis shows the term value; the bigger the dot, the larger the market cap. Note that "N/A" values will not show up in the chart.

   

Merck Beneish M-Score Distribution

For the Drug Manufacturers industry and Healthcare sector, Merck's Beneish M-Score distribution charts can be found below:

* The bar in red indicates where Merck's Beneish M-Score falls into.



Merck Beneish M-Score Calculation

The M-score was created by Professor Messod Beneish. Instead of measuring the bankruptcy risk (Altman Z-Score) or business trend (Piotroski 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 Merck 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 * 0.9443+0.528 * 0.9563+0.404 * 1.0579+0.892 * 1.3021+0.115 * 1.0055
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.8397+4.679 * -0.0217-0.327 * 0.9558
=-2.32

* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD.
* For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.

This Year (Jun22) TTM:Last Year (Jun21) TTM:
Total Receivables was $9,643 Mil.
Revenue was 14593 + 15901 + 13521 + 13154 = $57,169 Mil.
Gross Profit was 10377 + 10521 + 9647 + 9704 = $40,249 Mil.
Total Current Assets was $32,116 Mil.
Total Assets was $107,095 Mil.
Property, Plant and Equipment(Net PPE) was $20,059 Mil.
Depreciation, Depletion and Amortization(DDA) was $3,652 Mil.
Selling, General, & Admin. Expense(SGA) was $10,001 Mil.
Total Current Liabilities was $23,168 Mil.
Long-Term Debt & Capital Lease Obligation was $28,684 Mil.
Net Income was 3944 + 4310 + 3758 + 4567 = $16,579 Mil.
Non Operating Income was -355 + -525 + 360 + 532 = $12 Mil.
Cash Flow from Operations was 4302 + 4761 + 5031 + 4797 = $18,891 Mil.
Total Receivables was $7,843 Mil.
Revenue was 11402 + 10627 + 10948 + 10929 = $43,906 Mil.
Gross Profit was 8298 + 7428 + 5919 + 7916 = $29,561 Mil.
Total Current Assets was $28,665 Mil.
Total Assets was $90,688 Mil.
Property, Plant and Equipment(Net PPE) was $18,064 Mil.
Depreciation, Depletion and Amortization(DDA) was $3,310 Mil.
Selling, General, & Admin. Expense(SGA) was $9,147 Mil.
Total Current Liabilities was $21,906 Mil.
Long-Term Debt & Capital Lease Obligation was $24,033 Mil.




1. DSRI = Days Sales in Receivables Index

Measured as the ratio of Revenue in Total 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)
=(9643 / 57169) / (7843 / 43906)
=0.16867533 / 0.17863162
=0.9443

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)
=(29561 / 43906) / (40249 / 57169)
=0.67327928 / 0.7040354
=0.9563

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 Property, Plant and Equipment to Total Assets.

AQI=(1 - (CurrentAssets_t + PPE_t) / TotalAssets_t) / (1 - (CurrentAssets_t-1 + PPE_t-1) / TotalAssets_t-1)
=(1 - (32116 + 20059) / 107095) / (1 - (28665 + 18064) / 90688)
=0.51281572 / 0.48472786
=1.0579

4. SGI = Sales Growth Index

Ratio of Revenue 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
=57169 / 43906
=1.3021

5. DEPI = Depreciation Index

Measured as the ratio of the rate of Depreciation, Depletion and Amortization 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))
=(3310 / (3310 + 18064)) / (3652 / (3652 + 20059))
=0.15486105 / 0.15402134
=1.0055

Note: If the Depreciation, Depletion and Amortization data is not available, we assume that the depreciation rate is constant and set the Depreciation Index to 1.

6. SGAI = Sales, General and Administrative expenses Index

The ratio of Selling, General, & Admin. Expense(SGA) to Sales 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)
=(10001 / 57169) / (9147 / 43906)
=0.17493747 / 0.20833144
=0.8397

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 in leverage

LVGI=((LTD_t + CurrentLiabilities_t) / TotalAssets_t) / ((LTD_t-1 + CurrentLiabilities_t-1) / TotalAssets_t-1)
=((28684 + 23168) / 107095) / ((24033 + 21906) / 90688)
=0.48416826 / 0.50656096
=0.9558

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
=(16579 - 12 - 18891) / 107095
=-0.0217

An M-Score of equal or less than -1.78 suggests that the company is unlikely to be a manipulator. An M-Score of greater than -1.78 signals that the company is likely to be a manipulator.

Merck has a M-score of -2.32 suggests that the company is unlikely to be a manipulator.


Merck Business Description

Merck logo
Address
2000 Galloping Hill Road, Kenilworth, NJ, USA, 07033
Merck makes pharmaceutical products to treat several conditions in a number of therapeutic areas, including cardiometabolic disease, cancer, and infections. Within cancer, the firm's immuno-oncology platform is growing as a major contributor to overall sales. The company also has a substantial vaccine business, with treatments to prevent hepatitis B and pediatric diseases as well as HPV and shingles. Additionally, Merck sells animal health-related drugs. From a geographical perspective, close to half of the firm's sales are generated in the United States.
Executives
Baker Douglas M Jr director 370 WBASHA ST NORTH ST PAUL MN 55102
Oosthuizen Johannes Jacobus officer: SVP, U.S. Market 2000 GALLOPING HILL RD KENILWORTH NJ 07033
Garay Arpa officer: SVP Human Health Global Mktg. 2000 GALLOPING HILL RD KENILWORTH NJ 07033
Downing Cristal N officer: Chief Comm. & Public Afrs Ofcr 2000 GALLOPING HILL RD KENILWORTH NJ 07033
Klobuchar Michael A officer: EVP - Chief Strategy Officer 2000 GALLOPING HILL RD KENILWORTH NJ 07033
Lecointe-cephas Lisa officer: SVP Chief Ethics & Com Officer 2000 GALLOPING HILL RD KENILWORTH NJ 07033
Litchfield Caroline officer: EVP & CFO 2000 GALLOPING HILL RD KENILWORTH NJ 07033
Mayo Stephen director 2000 GALLOPING HILL RD KENILWORTH NJ 07033
Li Dean Y officer: Executive VP & President, MRL 2000 GALLOPING HILL ROAD KENILWORTH NJ 07033
Williams David Michael officer: EVP,Chief Info&Digital Officer MERCK & CO., INC. 2000 GALLOPING HILL ROAD KENILWORTH NJ 07033
Lavizzo-mourey Risa J director GENERAL ELECTRIC COMPANY 5 NECCO STREET BOSTON MA 02210
Seidman Christine E director MERCK & CO., INC. 2000 GALLOPING HILL ROAD KENILWORTH NJ 07033
Warden Kathy J director 2980 FAIRVIEW PARK DRIVE FALLS CHURCH VA 22042
Craig Pamela director C/O ACCENTURE 161 N CLARK STREET CHICAGO IL 60601
Brun Leslie A director 435 DEVON PARK DRIVE 700 BUILDING WAYNE PA 19087

Merck Headlines

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