Merck KGaA (Merck KGaA) Beneish M-Score : -2.57 (As of Apr. 26, 2024)

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What is Merck KGaA Beneish M-Score?

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 -2.57 no higher than -1.78, which implies that the company is unlikely to be a manipulator.

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

MKKGY' s Beneish M-Score Range Over the Past 10 Years
Min: -2.79 Med: -2.49 Max: -2.3
Current: -2.57

During the past 13 years, the highest Beneish M-Score of Merck KGaA was -2.30. The lowest was -2.79. And the median was -2.49.

Merck KGaA Beneish M-Score Historical Data

The historical data trend for Merck KGaA'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.

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Merck KGaA Beneish M-Score Chart

Merck KGaA Annual Data

Trend

Dec14

Dec15

Dec16

Dec17

Dec18

Dec19

Dec20

Dec21

Dec22

Dec23

Beneish M-Score

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-2.54

-2.68

-2.49

-2.46

-2.57

Merck KGaA Quarterly Data
	Mar19	Jun19	Sep19	Dec19	Mar20	Jun20	Sep20	Dec20	Mar21	Jun21	Sep21	Dec21	Mar22	Jun22	Sep22	Dec22	Mar23	Jun23	Sep23	Dec23
Beneish M-Score	Get a 7-Day Free Trial															-2.46	-2.57	-2.61	-2.59	-2.57

Competitive Comparison of Merck KGaA's Beneish M-Score

For the Drug Manufacturers - Specialty & Generic subindustry, Merck KGaA'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 KGaA's Beneish M-Score Distribution in the Drug Manufacturers Industry

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

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

Merck KGaA 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 KGaA for today is based on a combination of the following eight different indices:

-4.84

0.92 * DSRI

0.528 * GMI

0.404 * AQI

0.892 * SGI

0.115 * DEPI

-4.84

0.92 * 1.0291

0.528 * 1.0442

0.404 * 0.9623

0.892 * 0.969

0.115 * 1.1577

0.172 * SGAI

4.679 * TATA

0.327 * LVGI

0.172 * 1.0397

4.679 * -0.019517

0.327 * 0.9593

-2.54

This Year (Dec23) TTM:

Last Year (Dec22) TTM:

Total Receivables was $4,481 Mil.
Revenue was 5697.928 + 5520.811 + 5744.312 + 5667.024 = $22,630 Mil.
Gross Profit was 3160.305 + 3213.447 + 3426.869 + 3554.604 = $13,355 Mil.
Total Current Assets was $13,515 Mil.
Total Assets was $52,884 Mil.
Property, Plant and Equipment(Net PPE) was $9,876 Mil.
Depreciation, Depletion and Amortization(DDA) was $2,028 Mil.
Selling, General, & Admin. Expense(SGA) was $5,713 Mil.
Total Current Liabilities was $9,486 Mil.
Long-Term Debt & Capital Lease Obligation was $10,075 Mil.
Net Income was 639.04 + 788.687 + 762.73 + 852.248 = $3,043 Mil.
Non Operating Income was 0 + 0 + 0 + 0 = $0 Mil.
Cash Flow from Operations was 1148.31 + 1339.381 + 673.889 + 913.276 = $4,075 Mil.

Total Receivables was $4,494 Mil.
Revenue was 5995.763 + 5748.515 + 5885.835 + 5724.67 = $23,355 Mil.
Gross Profit was 3576.271 + 3622.772 + 3656.448 + 3536.344 = $14,392 Mil.
Total Current Assets was $12,925 Mil.
Total Assets was $51,414 Mil.
Property, Plant and Equipment(Net PPE) was $8,691 Mil.
Depreciation, Depletion and Amortization(DDA) was $2,135 Mil.
Selling, General, & Admin. Expense(SGA) was $5,670 Mil.
Total Current Liabilities was $10,078 Mil.
Long-Term Debt & Capital Lease Obligation was $9,746 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)
	=	(4480.916 / 22630.075)	/	(4493.644 / 23354.783)
	=	0.198007	/	0.192408
	=	1.0291

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)
	=	(14391.835 / 23354.783)	/	(13355.225 / 22630.075)
	=	0.616226	/	0.590154
	=	1.0442

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 - (13514.722 + 9875.682) / 52884.406)	/	(1 - (12924.788 + 8690.678) / 51414.195)
	=	0.557707	/	0.579582
	=	0.9623

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
	=	22630.075	/	23354.783
	=	0.969

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))
	=	(2134.758 / (2134.758 + 8690.678))	/	(2027.571 / (2027.571 + 9875.682))
	=	0.197198	/	0.170338
	=	1.1577

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)
	=	(5712.572 / 22630.075)	/	(5670.445 / 23354.783)
	=	0.252433	/	0.242796
	=	1.0397

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)
	=	((10075.245 + 9486.369) / 52884.406)	/	((9745.763 + 10078.39) / 51414.195)
	=	0.369894	/	0.385577
	=	0.9593

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
	=	(3042.705 - 0	-	4074.856)	/	52884.406
	=	-0.019517

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 KGaA has a M-score of -2.54 suggests that the company is unlikely to be a manipulator.

Merck KGaA Beneish M-Score Related Terms

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Merck KGaA (Merck KGaA) Business Description

Industry

GURUFOCUS.COM » STOCK LIST » Healthcare » Drug Manufacturers » Merck KGaA (OTCPK:MKKGY) » Definitions » Beneish M-Score

Comparable Companies

Traded in Other Exchanges

MKGAF:USA MRK:Italy MRKd:UK 0O14:UK MRK:Germany MRCK:Austria

Address

Frankfurter Strasse 250, Darmstadt, HE, DEU, 64293

Website

https://www.emdgroup.com

Merck KGaA operates in three main segments: life sciences, performance materials, and healthcare. The life sciences segment (47% of 2022 sales) primarily provides laboratory consumables and services to researchers in academia and applied fields, including the biopharmaceutical industry. In the healthcare segment (35%), Merck develops, manufactures, and sells branded pharmaceuticals with significant therapeutic concentrations in oncology, multiple sclerosis, and fertility. In its electronics segment (18%), the company offers specialty materials to manufacture a variety of products, such as semiconductors, flat-screen televisions, automobiles, and cosmetics. In 1995, the E. Merck KG family publicly sold part of the company, resulting in the current 30% public ownership of the firm.