Seven Hills Realty Trust (Seven Hills Realty Trust) Beneish M-Score

: -0.67 (As of Today)

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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 -0.67 higher than -1.78, which implies that the company might have manipulated its financial results.

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

SEVN' s Beneish M-Score Range Over the Past 10 Years
Min: -2.42 Med: -1.55 Max: -0.67
Current: -0.67

During the past 13 years, the highest Beneish M-Score of Seven Hills Realty Trust was -0.67. The lowest was -2.42. And the median was -1.55.

Seven Hills Realty Trust 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 Seven Hills Realty Trust for today is based on a combination of the following eight different indices:

-4.84

0.92 * DSRI

0.528 * GMI

0.404 * AQI

0.892 * SGI

0.115 * DEPI

-4.84

0.92 * 0.9614

0.528 * 1

0.404 * 5.6491

0.892 * 0.9666

0.115 * 1

0.172 * SGAI

4.679 * TATA

0.327 * LVGI

0.172 * 1.2768

4.679 * 0.007486

0.327 * 0.9845

-0.67

* 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 $625.72 Mil.
Revenue was 8.613 + 8.252 + 7.824 + 8.275 = $32.96 Mil.
Gross Profit was 8.613 + 8.252 + 7.824 + 8.275 = $32.96 Mil.
Total Current Assets was $713.57 Mil.
Total Assets was $731.53 Mil.
Property, Plant and Equipment(Net PPE) was $4.14 Mil.
Depreciation, Depletion and Amortization(DDA) was $0.00 Mil.
Selling, General, & Admin. Expense(SGA) was $7.84 Mil.
Total Current Liabilities was $2.05 Mil.
Long-Term Debt & Capital Lease Obligation was $454.42 Mil.
Net Income was 5.826 + 7.473 + 4.644 + 7.803 = $25.75 Mil.
Non Operating Income was 0 + 0 + 0 + 0 = $0.00 Mil.
Cash Flow from Operations was 5.326 + 3.338 + 5.029 + 6.577 = $20.27 Mil.

Total Receivables was $673.28 Mil.
Revenue was 8.218 + 6.735 + 6.435 + 12.714 = $34.10 Mil.
Gross Profit was 8.218 + 6.735 + 6.435 + 12.714 = $34.10 Mil.
Total Current Assets was $744.35 Mil.
Total Assets was $746.85 Mil.
Property, Plant and Equipment(Net PPE) was $0.00 Mil.
Depreciation, Depletion and Amortization(DDA) was $-2.11 Mil.
Selling, General, & Admin. Expense(SGA) was $6.35 Mil.
Total Current Liabilities was $1.84 Mil.
Long-Term Debt & Capital Lease Obligation was $471.52 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)
	=	(625.718 / 32.964)	/	(673.283 / 34.102)
	=	18.981859	/	19.743212
	=	0.9614

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)
	=	(34.102 / 34.102)	/	(32.964 / 32.964)
	=	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 - (713.573 + 4.137) / 731.525)	/	(1 - (744.35 + 0) / 746.847)
	=	0.018885	/	0.003343
	=	5.6491

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
	=	32.964	/	34.102
	=	0.9666

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))
	=	(-2.112 / (-2.112 + 0))	/	(0 / (0 + 4.137))
	=	1	/	0
	=	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)
	=	(7.836 / 32.964)	/	(6.349 / 34.102)
	=	0.237714	/	0.186177
	=	1.2768

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)
	=	((454.422 + 2.047) / 731.525)	/	((471.521 + 1.844) / 746.847)
	=	0.623996	/	0.633818
	=	0.9845

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
	=	(25.746 - 0	-	20.27)	/	731.525
	=	0.007486

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.

Seven Hills Realty Trust has a M-score of -0.67 signals that the company is likely to be a manipulator.

Seven Hills Realty Trust Beneish M-Score Related Terms

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Seven Hills Realty Trust (Seven Hills Realty Trust) Business Description

Industry

GURUFOCUS.COM » STOCK LIST » Real Estate » REITs » Seven Hills Realty Trust (NAS:SEVN) » Definitions » Beneish M-Score

Comparable Companies

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Traded in Other Exchanges

N/A

Address

255 Washington Street, Two Newton Place, Suite 300, Newton, MA, USA, 02458

Website

https://www.rmrfunds.com

Seven Hills Realty Trust, formerly RMR Mortgage Trust is a real estate investment trust. The company is engaged in the business of originating and investing in first mortgage whole loans secured by the middle market and transitional commercial real estate. Its non-fundamental primary objective is to balance capital preservation by generating risk-adjusted returns.

Executives

Barbara D Gilmore	director	C/O THE RMR GROUP LLC, TWO NEWTON PL., 255 WASH. ST., STE. 300, NEWTON MA 02458
Tiffany R Sy	officer: CFO and Treasurer	TWO NEWTON PLACE, 225 WASHINGTON STREET SUITE 300, NEWTON MA 02458
Thomas J. Lorenzini	officer: President	TREMONT MORTGAGE TRUST, TWO NEWTON PLACE, 255 WASHINGTON STREET, SUITE 300, NEWTON MA 02458-1634
Adam D. Portnoy	director, 10 percent owner, officer: President of Fund, other: Dir.,Pres.,Owner of Advisor	C/O THE RMR GROUP LLC, TWO NEWTON PL., 255 WASH. ST., STE. 300, NEWTON MA 02458
Tremont Realty Capital Llc	10 percent owner	TWO NEWTON PLACE, 255 WASHINGTON STREET, SUITE 300, NEWTON MA 02458-1634
Rmr Group Inc.	10 percent owner	TWO NEWTON PL., 255 WASH. ST., STE. 300, NEWTON MA 02458
Rmr Group Llc	10 percent owner	TWO NEWTON PLACE, 255 WASHINGTON STREET, SUITE 300, NEWTON MA 02458
Abp Trust	10 percent owner	TWO NEWTON PLACE, 255 WASHINGTON STREET, SUITE 300, NEWTON MA 02458
Phyllis M. Hollis	director	TWO NEWTON PLACE, 255 WASHINGTON STREET, SUITE 300, NEWTON MA 02458-1634
Matthew P. Jordan	director	C/O THE RMR GROUP INC., TWO NEWTON PLACE, 255 WASHINGTON STREET, SUITE 300, NEWTON MA 02458-1634
Joseph Morea	director	C/O REIT MANAGEMENT & RESEARCH LLC, TWO NEWTON PLACE, 255 WASHINGTON STREET, NEWTON MA 02458
William A. Lamkin	director	C/O THE RMR GROUP LLC, TWO NEWTON PL., 255 WASH. ST., STE. 300, NEWTON MA 02458
Gerald Douglas Lanois	officer: CFO and Treasurer	C/O THE RMR GROUP LLC, TWO NEWTON PLACE, 255 WASHINGTON STREET, SUITE 300, NEWTON MA 02458-1634
Brian E. Donley	officer: CFO, Treasurer and Asst. Sect.	C/O THE RMR GROUP LLC,, TWO NEWTON PL., 255 WASHINGTON ST., NEWTON MA 02458
Barry M. Portnoy	director, 10 percent owner, other: Director,VP & Owner of Advisor	C/O THE RMR GROUP LLC, TWO NEWTON PL., 255 WASH. ST., STE. 300, NEWTON MA 02458