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# Chubb (CB) Beneish M-Score : -2.44 (As of Aug. 15, 2024)

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## What is Chubb Beneish M-Score?

Note: Financial institutions were excluded from the sample in Beneish paper when calculating Beneish M-Score. Thus, the prediction might not fit banks and insurance companies.

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 -2.44 no higher than -1.78, which implies that the company is unlikely to be a manipulator.

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

CB' s Beneish M-Score Range Over the Past 10 Years
Min: -3.12   Med: -2.48   Max: -2.02
Current: -2.44

During the past 13 years, the highest Beneish M-Score of Chubb was -2.02. The lowest was -3.12. And the median was -2.48.

## Chubb 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 Chubb 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 * 0.9342 + 0.528 * 1 + 0.404 * 1 + 0.892 * 1.1596 + 0.115 * 1 - 0.172 * SGAI + 4.679 * TATA - 0.327 * LVGI - 0.172 * 0.9963 + 4.679 * -0.022033 - 0.327 * 0.8235 = -2.44

* 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 (Jun24) TTM: Last Year (Jun23) TTM: Total Receivables was USD35,575 Mil. Revenue was 13903 + 12957 + 13084 + 13889 = USD53,833 Mil. Gross Profit was 13903 + 12957 + 13084 + 13889 = USD53,833 Mil. Total Current Assets was USD0 Mil. Total Assets was USD238,551 Mil. Property, Plant and Equipment(Net PPE) was USD0 Mil. Depreciation, Depletion and Amortization(DDA) was USD328 Mil. Selling, General, & Admin. Expense(SGA) was USD4,272 Mil. Total Current Liabilities was USD0 Mil. Long-Term Debt & Capital Lease Obligation was USD13,178 Mil. Net Income was 2230 + 2143 + 3300 + 2043 = USD9,716 Mil. Non Operating Income was -29 + 21 + -153 + -32 = USD-193 Mil. Cash Flow from Operations was 4079 + 3220 + 3186 + 4680 = USD15,165 Mil. Total Receivables was USD32,841 Mil. Revenue was 11821 + 11032 + 11517 + 12055 = USD46,425 Mil. Gross Profit was 11821 + 11032 + 11517 + 12055 = USD46,425 Mil. Total Current Assets was USD0 Mil. Total Assets was USD205,448 Mil. Property, Plant and Equipment(Net PPE) was USD0 Mil. Depreciation, Depletion and Amortization(DDA) was USD285 Mil. Selling, General, & Admin. Expense(SGA) was USD3,698 Mil. Total Current Liabilities was USD0 Mil. Long-Term Debt & Capital Lease Obligation was USD13,782 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) = (35575 / 53833) / (32841 / 46425) = 0.66084 / 0.707399 = 0.9342

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) = (46425 / 46425) / (53833 / 53833) = 1 / 1 = 1

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 - (0 + 0) / 238551) / (1 - (0 + 0) / 205448) = 1 / 1 = 1

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 = 53833 / 46425 = 1.1596

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)) = (285 / (285 + 0)) / (328 / (328 + 0)) = 1 / 1 = 1

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) = (4272 / 53833) / (3698 / 46425) = 0.079357 / 0.079655 = 0.9963

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) = ((13178 + 0) / 238551) / ((13782 + 0) / 205448) = 0.055242 / 0.067083 = 0.8235

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 = (9716 - -193 - 15165) / 238551 = -0.022033

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.

Chubb has a M-score of -2.44 suggests that the company is unlikely to be a manipulator.

## Chubb Beneish M-Score Related Terms

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