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China Information Technology Inc (NAS:CNIT)
Beneish M-Score
-2.08 (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.

China Information Technology Inc has a M-score of -2.08 signals that the company is a manipulator.

CNIT' s Beneish M-Score Range Over the Past 10 Years
Min: -6.1   Max: 10000000
Current: -2.08

-6.1
10000000

During the past 11 years, the highest Beneish M-Score of China Information Technology Inc was 10000000.00. The lowest was -6.10. And the median was -2.08.


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 China Information Technology 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 * 3.105+0.528 * 0.8685+0.404 * 0.7503+0.892 * 0.1509+0.115 * 1.4958
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 2.5106+4.679 * -0.109-0.327 * 0.6865
=-2.08

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.

This Year (Dec15) TTM:Last Year (Dec14) TTM:
Accounts Receivable was $3.18 Mil.
Revenue was $10.29 Mil.
Gross Profit was $3.90 Mil.
Total Current Assets was $33.89 Mil.
Total Assets was $66.09 Mil.
Property, Plant and Equipment(Net PPE) was $8.37 Mil.
Depreciation, Depletion and Amortization(DDA) was $2.54 Mil.
Selling, General & Admin. Expense(SGA) was $13.89 Mil.
Total Current Liabilities was $35.54 Mil.
Long-Term Debt was $0.00 Mil.
Net Income was $-7.50 Mil.
Non Operating Income was $25.61 Mil.
Cash Flow from Operations was $-25.92 Mil.
Accounts Receivable was $6.79 Mil.
Revenue was $68.16 Mil.
Gross Profit was $22.47 Mil.
Total Current Assets was $84.28 Mil.
Total Assets was $179.41 Mil.
Property, Plant and Equipment(Net PPE) was $8.92 Mil.
Depreciation, Depletion and Amortization(DDA) was $4.77 Mil.
Selling, General & Admin. Expense(SGA) was $36.65 Mil.
Total Current Liabilities was $140.32 Mil.
Long-Term Debt was $0.22 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)
=(3.18 / 10.285) / (6.787 / 68.158)
=0.30918814 / 0.09957745
=3.105

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)
=(22.47 / 68.158) / (3.904 / 10.285)
=0.32967517 / 0.37958192
=0.8685

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 - (33.889 + 8.373) / 66.092) / (1 - (84.276 + 8.921) / 179.406)
=0.36055801 / 0.48052462
=0.7503

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
=10.285 / 68.158
=0.1509

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))
=(4.767 / (4.767 + 8.921)) / (2.541 / (2.541 + 8.373))
=0.34826125 / 0.23282023
=1.4958

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)
=(13.885 / 10.285) / (36.65 / 68.158)
=1.35002431 / 0.53772118
=2.5106

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)
=((0 + 35.539) / 66.092) / ((0.215 + 140.319) / 179.406)
=0.53772015 / 0.78332943
=0.6865

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
=(-7.504 - 25.614 - -25.915) / 66.092
=-0.109

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.

China Information Technology Inc has a M-score of -2.08 signals that the company is likely to 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 own currency.

China Information Technology Inc Annual Data

Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15
DSRI 2.53061.30471.40980.84861.49641.12260.29450.33383.105
GMI 1.651.26820.91351.16451.1131.63051.04610.68820.8685
AQI 1.06631923111E+151.14391.04551.05090.93780.96451.50171.18870.7503
SGI 13.95082.81121.1841.62230.6990.75410.88150.89510.1509
DEPI 0.20740.60711.58110.92050.88060.70410.6860.72251.4958
SGAI 1.3751.1511.05840.97531.73553.25481.55150.40242.5106
LVGI 0.2113.18341.80691.00860.95391.42511.59561.15540.6865
TATA 0.13110.12330.06630.0155-0.0302-0.2802-0.5919-0.1035-0.109
M-score 430,792,969,366,507.50-0.59-1.86-1.89-2.52-4.14-6.10-3.74-2.08
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