GURUFOCUS.COM » STOCK LIST » Financial Services » Asset Management » China Everbright Ltd (OTCPK:CEVIY) » Definitions » Beneish M-Score

China Everbright (China Everbright) Beneish M-Score : 1.90 (As of Apr. 26, 2024)


View and export this data going back to 2008. Start your Free Trial

What is China Everbright 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.

Warning Sign:

Beneish M-Score 1.9 higher than -1.78, which implies that the company might have manipulated its financial results.

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

CEVIY' s Beneish M-Score Range Over the Past 10 Years
Min: -5.12   Med: -2.21   Max: 1.9
Current: 1.9

During the past 13 years, the highest Beneish M-Score of China Everbright was 1.90. The lowest was -5.12. And the median was -2.21.


China Everbright 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 China Everbright 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 * 1+0.404 * 0.9718+0.892 * 6.0671+0.115 * 1.0682
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.1416+4.679 * -0.062842-0.327 * 1.0289
=1.88

* 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 (Dec23) TTM:Last Year (Dec22) TTM:
Total Receivables was $0.0 Mil.
Revenue was $768.3 Mil.
Gross Profit was $768.3 Mil.
Total Current Assets was $1,220.4 Mil.
Total Assets was $10,190.8 Mil.
Property, Plant and Equipment(Net PPE) was $59.4 Mil.
Depreciation, Depletion and Amortization(DDA) was $7.0 Mil.
Selling, General, & Admin. Expense(SGA) was $209.9 Mil.
Total Current Liabilities was $379.3 Mil.
Long-Term Debt & Capital Lease Obligation was $4,151.3 Mil.
Net Income was $-233.6 Mil.
Gross Profit was $0.0 Mil.
Cash Flow from Operations was $406.8 Mil.
Total Receivables was $0.0 Mil.
Revenue was $126.6 Mil.
Gross Profit was $126.6 Mil.
Total Current Assets was $1,020.6 Mil.
Total Assets was $10,850.6 Mil.
Property, Plant and Equipment(Net PPE) was $67.0 Mil.
Depreciation, Depletion and Amortization(DDA) was $8.6 Mil.
Selling, General, & Admin. Expense(SGA) was $244.3 Mil.
Total Current Liabilities was $452.5 Mil.
Long-Term Debt & Capital Lease Obligation was $4,236.0 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)
=(0 / 768.304) / (0 / 126.634)
=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)
=(126.634 / 126.634) / (768.304 / 768.304)
=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 - (1220.405 + 59.408) / 10190.776) / (1 - (1020.582 + 67.012) / 10850.645)
=0.874415 / 0.899767
=0.9718

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
=768.304 / 126.634
=6.0671

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))
=(8.554 / (8.554 + 67.012)) / (7.042 / (7.042 + 59.408))
=0.113199 / 0.105974
=1.0682

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)
=(209.854 / 768.304) / (244.292 / 126.634)
=0.273139 / 1.929119
=0.1416

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)
=((4151.319 + 379.33) / 10190.776) / ((4235.963 + 452.519) / 10850.645)
=0.444583 / 0.432092
=1.0289

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
=(-233.626 - 0 - 406.787) / 10190.776
=-0.062842

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.

China Everbright has a M-score of 1.88 signals that the company is likely to be a manipulator.


China Everbright Beneish M-Score Related Terms

Thank you for viewing the detailed overview of China Everbright's Beneish M-Score provided by GuruFocus.com. Please click on the following links to see related term pages.


China Everbright (China Everbright) Business Description

Traded in Other Exchanges
Address
16 Harcourt Road, 46th Floor, Far East Finance Centre, Hong Kong, HKG
China Everbright Ltd is an investment management firm based predominantly in Hong Kong. The company's core activity includes investing in long-term investment vehicles to secure capital appreciation for its investors. Its investment portfolio is comprised of unlisted equity securities, equity derivatives, start-up, and development-stage companies, and long-term equity. The company's operating segments include Fund Management Business and Principal Investments Business. Geographically, It generates maximum revenue from Mainland China.