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Li & Fung Ltd (OTCPK:LFUGF)
Beneish M-Score
-2.56 (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.

Li & Fung Ltd has a M-score of -2.56 suggests that the company is not a manipulator.

LFUGF' s Beneish M-Score Range Over the Past 10 Years
Min: -3.48   Max: -2.33
Current: -2.56

-3.48
-2.33

During the past 13 years, the highest Beneish M-Score of Li & Fung Ltd was -2.33. The lowest was -3.48. And the median was -2.53.


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 Li & Fung Ltd 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+0.528 * 0.9864+0.404 * 1.0537+0.892 * 0.9763+0.115 * 1.0184
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.047+4.679 * -0.0155-0.327 * 0.9903
=-2.56

* 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 $0 Mil.
Revenue was $18,831 Mil.
Gross Profit was $2,159 Mil.
Total Current Assets was $3,346 Mil.
Total Assets was $7,933 Mil.
Property, Plant and Equipment(Net PPE) was $242 Mil.
Depreciation, Depletion and Amortization(DDA) was $110 Mil.
Selling, General & Admin. Expense(SGA) was $1,676 Mil.
Total Current Liabilities was $3,339 Mil.
Long-Term Debt was $1,254 Mil.
Net Income was $421 Mil.
Non Operating Income was $0 Mil.
Cash Flow from Operations was $544 Mil.
Accounts Receivable was $0 Mil.
Revenue was $19,288 Mil.
Gross Profit was $2,182 Mil.
Total Current Assets was $3,825 Mil.
Total Assets was $8,477 Mil.
Property, Plant and Equipment(Net PPE) was $245 Mil.
Depreciation, Depletion and Amortization(DDA) was $115 Mil.
Selling, General & Admin. Expense(SGA) was $1,640 Mil.
Total Current Liabilities was $3,702 Mil.
Long-Term Debt was $1,254 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)
=(0 / 18830.835) / (0 / 19288.499)
=0 / 0
=1

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)
=( / 19288.499) / ( / 18830.835)
=0.11309895 / 0.11466194
=0.9864

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 - (3345.687 + 241.626) / 7933.099) / (1 - (3824.872 + 244.907) / 8477.022)
=0.54780433 / 0.51990463
=1.0537

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
=18830.835 / 19288.499
=0.9763

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))
=(114.983 / (114.983 + 244.907)) / (110.456 / (110.456 + 241.626))
=0.31949485 / 0.31372237
=1.0184

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)
=(1676.401 / 18830.835) / (1640.09 / 19288.499)
=0.08902425 / 0.08502943
=1.047

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)
=((1253.823 + 3339.181) / 7933.099) / ((1254.369 + 3701.518) / 8477.022)
=0.57896719 / 0.58462595
=0.9903

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
=(421.046 - 0 - 543.928) / 7933.099
=-0.0155

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.

Li & Fung Ltd has a M-score of -2.56 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 own currency.

Li & Fung Ltd Annual Data

Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15
DSRI 0.90461.08430.76771.10820.965301
GMI 0.90690.8490.91291.05110.91541.370.9864
AQI 1.15451.16081.15370.98731.0320.83861.0537
SGI 0.9431.18371.2561.00961.02590.92980.9763
DEPI 00.88480.82841.01290.96391.31581.0184
SGAI 1.03461.13841.15091.10820.96710.72491.047
LVGI 0.90680.84410.93510.94741.00311.36550.9903
TATA -0.0809-0.0208-0.02220.0026-0.0174-0.0232-0.0155
M-score -3.07-2.34-2.58-2.34-2.60-3.48-2.56
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