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LK · Luckin Coffee Inc.

CIK 1742832 · SIC 5812 Eating Places · Latest FY 2019
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-0.42
Beneish M
0.90
Altman Z
3.40
Dechow F
2/9
Piotroski
5/6
Montier C

All metrics — FY2019 · click any row to see the formula

Beneish M-Score-0.42
Composite earnings-manipulation index built from 8 component ratios.
M = −4.84 + 0.92·DSRI + 0.528·GMI + 0.404·AQI + 0.892·SGI + 0.115·DEPI − 0.172·SGAI + 4.679·TATA − 0.327·LVGI
Plugged in:
M = −4.84 + 0.92 × 2.100 = +1.932 + 0.528 × 1.300 = +0.686 + 0.404 × 1.450 = +0.586 + 0.892 × 5.500 = +4.906 + 0.115 × 0.920 = +0.106 − 0.172 × 1.200 = -0.206 + 4.679 × 0.180 = +0.842 − 0.327 × 1.450 = -0.474 = -0.42
Threshold: >-1.78 flags possible manipulation. >-1.49 is the original Beneish (1999) threshold.
Altman Z-Score0.90
Bankruptcy / financial-distress index. Distress correlates with stronger incentive to manage earnings.
Z = 1.2·X1 + 1.4·X2 + 3.3·X3 + 0.6·X4 + 1.0·X5 X1 = (Current Assets − Current Liabilities) / Total Assets [working capital] X2 = Retained Earnings / Total Assets [accumulated profitability] X3 = EBIT / Total Assets [operating efficiency] X4 = Market Cap / Total Liabilities [solvency] X5 = Revenue / Total Assets [asset turnover]
Threshold: Z < 1.81 = distress zone, 1.81–2.99 = grey zone, >2.99 = safe.
Note: this build uses Equity/Assets as a proxy for X2 (no retained-earnings concept pulled) and 0 for X4 (no price feed wired in yet), so absolute Z values are biased; rankings are still meaningful.
Dechow F-Score3.40
Probability of a material misstatement, trained on SEC Accounting and Auditing Enforcement Releases (Dechow et al. 2011, Model 1).
predicted = −7.893 + 0.790·RSST_accruals + 2.518·ΔReceivables + 1.191·ΔInventory + 1.979·%SoftAssets + 0.171·%ΔRevenue − 0.932·ΔROA prob = 1 / (1 + exp(−predicted)) F-Score = prob / 0.0037 (unconditional rate of misstatement)
Threshold: F > 1 = above average risk; > 2.45 = high risk; > 4.62 = very high risk.
Piotroski F-Score2 / 9
Sums 9 binary indicators of fundamental health. Higher is better.
+1 if Net Income > 0 +1 if CFO > 0 +1 if ΔROA > 0 +1 if CFO > Net Income (accrual quality) +1 if Δ(LongTermDebt/TA) < 0 +1 if Δ(CurrentRatio) > 0 +1 if shares outstanding did not rise +1 if Δ(GrossMargin) > 0 +1 if Δ(AssetTurnover) > 0
Threshold: 0–3 = weak, 4–6 = average, 7–9 = strong.
Montier C-Score5 / 6
Six binary fraud screens (Montier 2008). Higher = more flags fired simultaneously.
+1 if Net Income > CFO (earnings exceed cash) +1 if Days Sales Outstanding rising +1 if Days Sales of Inventory rising +1 if (Other current assets / TA) rising +1 if Depreciation/PP&E declining +1 if Total assets growing >10% YoY (acquisition-fueled growth)
Threshold: ≥4 of 6 is the warning band.
DSRI · Days Sales Receivable Index2.100
Year-over-year change in (Receivables / Sales). Rising means collections slowing — a classic revenue-recognition red flag.
DSRI = (AR_t / Sales_t) ÷ (AR_t-1 / Sales_t-1)
Threshold: >1.31 in Beneish's original sample.
GMI · Gross Margin Index1.300
Inverse-direction: prior gross margin divided by current. >1 means margins deteriorated.
GMI = ((Sales_t-1 − COGS_t-1) / Sales_t-1) ÷ ((Sales_t − COGS_t) / Sales_t)
Threshold: >1.20 raises pressure to manage earnings.
AQI · Asset Quality Index1.450
Tracks change in soft (non-current, non-PP&E) assets as a share of total. Rising = intangibles, deferred costs, or capitalized expenses growing fast.
AQI = (1 − (CurrentAssets_t + PPE_t) / TA_t) ÷ (1 − (CurrentAssets_t-1 + PPE_t-1) / TA_t-1)
Threshold: >1.20.
SGI · Sales Growth Index5.500
Simply revenue growth. Aggressive growth alone isn't fraud, but pairs with other flags.
SGI = Sales_t / Sales_t-1
Watch above 1.50 in combination with DSRI/TATA.
DEPI · Depreciation Index0.920
Prior depreciation rate divided by current. >1 means depreciation slowed — useful lives may have been extended to suppress expense.
DEPI = (Dep_t-1 / (Dep_t-1 + PPE_t-1)) ÷ (Dep_t / (Dep_t + PPE_t))
Threshold: >1.10.
SGAI · SG&A Index1.200
Change in SG&A as a fraction of sales.
SGAI = (SGA_t / Sales_t) ÷ (SGA_t-1 / Sales_t-1)
Sharp moves either direction can signal one-time charges or aggressive capitalization.
LVGI · Leverage Index1.450
Change in (Total Liabilities / Total Assets). Rising leverage increases covenant pressure.
LVGI = (TL_t / TA_t) ÷ (TL_t-1 / TA_t-1)
Threshold: >1.20 in combination with weak earnings quality.
TATA · Total Accruals to Total Assets0.180
Net income that didn't show up as cash, scaled by assets. The Beneish formulation.
TATA = (NetIncome_t − CFO_t) / TotalAssets_t
Threshold: >0.03 is the classic Sloan accruals red flag; the higher and more sustained, the worse.
Sloan accruals ratio0.450
The original Sloan (1996) ratio: same numerator, scaled by *average* assets.
Accruals ratio = (NI_t − CFO_t) / ((TA_t + TA_t-1) / 2)
High-accrual firms historically underperform low-accrual firms by 10%+ annually.
CFO − Net Income gap-0.650
Operating cash flow minus net income, scaled by |NI|. Strongly negative = NI > CFO, which is the highest-conviction earnings-quality red flag.
gap = (CFO_t − NI_t) / (|NI_t| + 1)
Threshold: < −0.30.
Revenue − A/R growth gap-0.550
Revenue YoY growth minus receivables YoY growth, in decimal points. Negative = receivables outpacing sales.
gap = (Rev_t − Rev_t-1)/Rev_t-1 − (AR_t − AR_t-1)/AR_t-1
Threshold: < −0.10. Suggests bill-and-hold, channel stuffing, or collection deterioration.
Revenue − Inventory growth gap-0.300
Revenue YoY growth minus inventory YoY growth.
gap = (Rev_t − Rev_t-1)/Rev_t-1 − (Inv_t − Inv_t-1)/Inv_t-1
Threshold: < −0.10. Inventory build outpacing demand → future write-down risk.
Goodwill / Total Assets0.060
Share of the balance sheet attributable to past acquisition premiums.
GW/TA = Goodwill_t / TotalAssets_t
Threshold: >0.40 = acquisition-heavy; impairment risk is elevated when cash flow softens.

Composite scores over time

Earnings quality signals

Triggered red flags (15)

SeverityCodeHeadlineDetail
high M_SCORE Beneish M-Score -0.42 exceeds -1.78 Composite earnings-manipulation signal is in the warning zone.
high Z_SCORE Altman Z-Score 0.90 indicates distress Distress correlates with stronger incentive to manage earnings.
high F_SCORE Dechow F-Score 3.40 (>2.45) AAER-trained probability of misstatement is elevated.
medium PIOTROSKI Piotroski F-Score 2/9 Weak fundamental health: profitability, leverage, or efficiency deteriorating.
high MONTIER Montier C-Score 5/6 Multiple binary fraud screens triggered simultaneously.
medium DSRI Days-Sales-Receivable index 2.10 Receivables growing faster than sales — revenue-recognition risk or channel stuffing.
medium GMI Gross Margin Index 1.30 Margins deteriorated; pressure to manage earnings rises.
medium AQI Asset Quality Index 1.45 Soft assets (intangibles, deferrals) growing faster than hard assets.
low SGI Sales Growth Index 5.50 Aggressive growth pace; combine with other flags to assess quality.
low LVGI Leverage Index 1.45 Leverage rising — covenant pressure can incentivize earnings management.
high TATA Total Accruals / Total Assets 0.180 Earnings far above operating cash flow; classic Sloan accruals red flag.
medium ACCRUALS Accruals ratio 0.45 High-accrual firms historically underperform — quality of earnings concern.
high CFO_NI_GAP CFO − NI gap -65% Net income materially exceeds operating cash flow.
medium REV_AR Revenue grew -55pp slower than receivables Sales not converting to cash — bill-and-hold or extended terms suspected.
medium REV_INV Inventory growing faster than revenue (-30pp) Possible obsolescence or future write-down risk.

Rule-based narrative

Luckin Coffee Inc. (LK) FY2019 — 15 flags (6 high, 7 medium, 2 low).

**Revenue inflation pattern**: receivables outpacing sales while accruals are high and operating cash flow lags reported earnings. Consistent with channel stuffing, bill-and-hold sales, or premature revenue recognition.

**Inventory build with margin compression**: stockpiling combined with falling gross margins suggests demand softness — elevated risk of future write-downs and earnings reset.

**Distress + manipulation signal**: financial distress amplifies management incentive to massage results. Treat reported earnings with skepticism.

Triggered findings:
- [HIGH] Beneish M-Score -0.42 exceeds -1.78 — Composite earnings-manipulation signal is in the warning zone.
- [HIGH] Altman Z-Score 0.90 indicates distress — Distress correlates with stronger incentive to manage earnings.
- [HIGH] Dechow F-Score 3.40 (>2.45) — AAER-trained probability of misstatement is elevated.
- [MEDIUM] Piotroski F-Score 2/9 — Weak fundamental health: profitability, leverage, or efficiency deteriorating.
- [HIGH] Montier C-Score 5/6 — Multiple binary fraud screens triggered simultaneously.
- [MEDIUM] Days-Sales-Receivable index 2.10 — Receivables growing faster than sales — revenue-recognition risk or channel stuffing.
- [MEDIUM] Gross Margin Index 1.30 — Margins deteriorated; pressure to manage earnings rises.
- [MEDIUM] Asset Quality Index 1.45 — Soft assets (intangibles, deferrals) growing faster than hard assets.
- [LOW] Sales Growth Index 5.50 — Aggressive growth pace; combine with other flags to assess quality.
- [LOW] Leverage Index 1.45 — Leverage rising — covenant pressure can incentivize earnings management.
- [HIGH] Total Accruals / Total Assets 0.180 — Earnings far above operating cash flow; classic Sloan accruals red flag.
- [MEDIUM] Accruals ratio 0.45 — High-accrual firms historically underperform — quality of earnings concern.
- [HIGH] CFO − NI gap -65% — Net income materially exceeds operating cash flow.
- [MEDIUM] Revenue grew -55pp slower than receivables — Sales not converting to cash — bill-and-hold or extended terms suspected.
- [MEDIUM] Inventory growing faster than revenue (-30pp) — Possible obsolescence or future write-down risk.

Claude analysis

Click "Generate" to call Claude. Findings JSON is sent as structured input; the model is instructed to explain plausible narratives without inventing facts.