Merck Beneish M Score

MRK
 Stock
  

USD 93.13  0.49  0.53%   

This module uses fundamental data of Merck to approximate the value of its Beneish M Score. Merck M Score tells investors if the company management is likely to be manipulating earnings. The score is calculated using eight financial indicators that are adjusted by a specific multiplier. Please note, the M Score is a probabilistic model and cannot detect companies that manipulate their earnings with 100% accuracy. Additionally, see Merck Piotroski F Score and Merck Altman Z Score analysis.
  
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Merck Debt Current is increasing as compared to previous years. The last year's value of Debt Current was reported at 2.41 Billion. The current Debt to Equity Ratio is estimated to increase to 1.81, while Total Debt is projected to decrease to under 32 B. Merck Inventory Turnover is decreasing as compared to previous years. The last year's value of Inventory Turnover was reported at 2.22. The current Accounts Payable Turnover is estimated to increase to 14.94, while Operating Margin is projected to decrease to 20.62.
At this time, it appears that Merck Company is an unlikely manipulator. The earnings manipulation may begin if Merck's top management creates an artificial sense of financial success, forcing the stock price to be traded at a high price-earnings multiple than it should be. In general, excessive earnings management by Merck executives may lead to removing some of the operating profits from subsequent periods to inflate earnings in the following periods. This way, the manipulation of Merck's earnings can lead to misrepresentations of actual financial condition, taking the otherwise loyal stakeholders on to the path of questionable ethical practices and plain fraud.
-2.68
Beneish M Score - Unlikely Manipulator
Elasticity of Receivables1.09Focus
Asset Quality0.96Focus
Expense Coverage1.11Focus
Gross Margin Strengs1.06Focus
Accruals Factor1.11Focus
Depreciation Resistance0.82Focus
Net Sales Growth0.9Focus
Financial Leverage Condition1.09Focus

Merck Beneish M-Score Indicator Trends

The cure to earnings manipulation is the transparency of financial reporting. It will typically remove the temptation of the top executives to inflate earnings (i.e., to promote the idea of 'winning at any cost'). Because a healthy internal audit department can enhance transparency, the board should promote the auditors' access to all the record-keeping systems across the enterprise. For example, if Merck's auditors report directly to the board (not management), the managers will be reluctant to manipulate simply due to the fear of punishment. On the other hand, the auditors will be free to investigate the ledgers properly because they know that the board has their back.
Current ValueLast YearChange From Last Year 10 Year Trend
Revenues43.7 B48.7 B
Moderately Down
Decreasing
Slightly volatile
Selling General and Administrative Expense9.6 B9.6 B
Slightly Down
Decreasing
Slightly volatile
Net Cash Flow from Operations13.7 B14.1 B
Fairly Down
Increasing
Stable
Depreciation Amortization and AccretionB3.2 B
Fairly Up
Decreasing
Slightly volatile
Total Assets96.4 B105.7 B
Significantly Down
Decreasing
Slightly volatile
Investments379.7 M370 M
Fairly Up
Decreasing
Slightly volatile
Investments Current714.9 M696.6 M
Fairly Up
Decreasing
Stable
Investments Non Current379.7 M370 M
Fairly Up
Decreasing
Slightly volatile
Property Plant and Equipment Net18.7 B19.3 B
Sufficiently Down
Increasing
Stable
Trade and Non Trade Receivables9.1 B9.2 B
Fairly Down
Increasing
Stable
Total Liabilities67.8 B67.4 B
Slightly Up
Increasing
Slightly volatile
Current Assets28.7 B30.3 B
Notably Down
Decreasing
Slightly volatile
Assets Non Current67.7 B75.4 B
Moderately Down
Decreasing
Slightly volatile
Current Liabilities24.2 B23.9 B
Fairly Up
Increasing
Slightly volatile
Liabilities Non Current43.6 B43.6 B
Slightly Up
Increasing
Slightly volatile
Total Debt32 B33.1 B
Sufficiently Down
Increasing
Slightly volatile
Debt Current3.2 B2.4 B
Significantly Up
Increasing
Stable
Debt Non Current28.7 B30.7 B
Notably Down
Increasing
Slightly volatile
Operating Income10.8 B12.5 B
Fairly Down
Increasing
Slightly volatile
Gross Margin0.760.72
Notably Up
Increasing
Slightly volatile

Merck Company Beneish M-Score Driver Matrix

One of the toughest challenges investors face today is learning how to quickly synthesize historical financial statements and information provided by the company, SEC reporting, and various external parties in order to detect the potential manipulation of earnings. Understanding the correlation between Merck's different financial indicators related to revenue, expenses, operating profit, and net earnings helps investors identify and prioritize their investing strategies towards Merck in a much-optimized way. Analyzing correlations between earnings drivers directly associated with dollar figures is the most effective way to find Merck's degree of accounting gimmicks and manipulations.

About Merck Beneish M Score

M-Score is one of many grading techniques for value stocks. It was developed by Professor M. Daniel Beneish of the Kelley School of Business at Indiana University and published in 1999 under the paper titled The Detection of Earnings Manipulation. The Beneish score is a multi-factor model that utilizes financial identifiers to compile eight variables used to classify whether a company has manipulated its reported earnings. The variables are built from the officially filed financial statements to create a final score call 'M Score.' The score helps to identify companies that are likely to manipulate their profits if they show deteriorating gross margins, operating expenses, and leverage against growing revenue.

Operating Expenses

24.05 Billion

Merck Operating Expenses is increasing as compared to previous years. The last year's value of Operating Expenses was reported at 22.54 Billion

Merck Earnings Manipulation Drivers

Although earnings manipulation is typically not the result of intentional misconduct by the c-level executives, it is still a widespread practice by the senior management of public companies such as Merck. It is usually done by a series of misrepresentations of various accounting rules and operating activities across multiple financial cycles. The best way to spot the manipulation is to examine the historical financial statement to find inconsistencies in earning reports to find trends in assets or liabilities that are not sustainable in the future.
201720182019202020212022 (projected)
Revenues40.12 B42.29 B39.12 B41.52 B48.7 B43.73 B
Total Assets87.87 B82.64 B84.4 B91.59 B105.69 B96.37 B
Current Assets24.77 B25.88 B27.48 B27.76 B30.27 B28.67 B
Assets Non Current63.11 B56.76 B56.91 B63.82 B75.43 B67.7 B
Total Liabilities53.3 B55.76 B58.4 B66.18 B67.44 B67.84 B
Current Liabilities18.61 B22.21 B22.22 B27.33 B23.87 B24.22 B
Total Debt24.41 B25.11 B26.35 B31.79 B33.1 B31.98 B
Debt Current3.06 B5.31 B3.61 B6.43 B2.41 B3.24 B
Debt Non Current21.35 B19.81 B22.74 B25.36 B30.69 B28.73 B
Operating Income6.02 B8.3 B7.3 B4.97 B12.54 B10.78 B
Investments14.53 B7.13 B2.24 B785 M370 M379.74 M
Investments Current7.83 B2.41 B899 M774 M696.6 M714.93 M

About Merck Fundamental Analysis

The Macroaxis Fundamental Analysis modules help investors analyze Merck Company's financials across various querterly and yearly statements, indicators and fundamental ratios. We help investors to determine the real value of Merck using virtually all public information available. We use both quantitative as well as qualitative analysis to arrive at the intrinsic value of Merck Company based on its fundamental data. In general, a quantitative approach, as applied to this company, focuses on analyzing financial statements comparatively, whereas a qaualitative method uses data that is important to a company's growth but cannot be measured and presented in a numerical way.
Please read more on our fundamental analysis page.
Merck Co., Inc. operates as a healthcare company worldwide. It operates through two segments, Pharmaceutical and Animal Health. The Pharmaceutical segment offers human health pharmaceutical products in the areas of oncology, hospital acute care, immunology, neuroscience, virology, cardiovascular, and diabetes, as well as vaccine products, such as preventive pediatric, adolescent, and adult vaccines. The Animal Health segment discovers, develops, manufactures, and markets veterinary pharmaceuticals, vaccines, and health management solutions and services, as well as digitally connected identification, traceability, and monitoring products. It serves drug wholesalers and retailers, hospitals, and government agencies managed health care providers, such as health maintenance organizations, pharmacy benefit managers, and other institutions and physicians and physician distributors, veterinarians, and animal producers. The company has collaborations with AstraZeneca PLC Bayer AG Eisai Co., Ltd. Ridgeback Biotherapeutics and Gilead Sciences, Inc. to jointly develop and commercialize long-acting treatments in HIV. Merck Co., Inc. was founded in 1891 and is headquartered in Kenilworth, New Jersey.

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Additionally, see Merck Piotroski F Score and Merck Altman Z Score analysis. Note that the Merck Company information on this page should be used as a complementary analysis to other Merck's statistical models used to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.

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Is Merck's industry expected to grow? Or is there an opportunity to expand the business' product line in the future? Factors like these will boost the valuation of Merck. If investors know Merck will grow in the future, the company's valuation will be higher. The financial industry is built on trying to define current growth potential and future valuation accurately. All the valuation information about Merck listed above have to be considered, but the key to understanding future value is determining which factors weigh more heavily than others.
The market value of Merck Company is measured differently than its book value, which is the value of Merck that is recorded on the company's balance sheet. Investors also form their own opinion of Merck's value that differs from its market value or its book value, called intrinsic value, which is Merck's true underlying value. Investors use various methods to calculate intrinsic value and buy a stock when its market value falls below its intrinsic value. Because Merck's market value can be influenced by many factors that don't directly affect Merck's underlying business (such as a pandemic or basic market pessimism), market value can vary widely from intrinsic value.
Please note, there is a significant difference between Merck's value and its price as these two are different measures arrived at by different means. Investors typically determine Merck value by looking at such factors as earnings, sales, fundamental and technical indicators, competition as well as analyst projections. However, Merck's price is the amount at which it trades on the open market and represents the number that a seller and buyer find agreeable to each party.