Grade: F — Major Red Flags
Framework: Schilit *Financial Shenanigans* + Beneish M-Score + forensic accounting principles
Data: SEC EDGAR 10-K (Filed 2026-02-12, FY ended December 31, 2025) + Yahoo Finance
Auditor: KPMG LLP — Unqualified opinion
CIK: 0001138118
One-line verdict: CBRE is the world's largest commercial real estate services firm (not a REIT), and its F grade reflects three issues: revenue grew 13.4% but CFFO declined 8.7% (A3 fail), cash of $1.9B covers only 19% of $10.0B debt (C4 fail), and goodwill plus intangibles of $10.0B equal 113% of equity (D1 fail). The CFFO/revenue divergence is the most concerning signal — it suggests revenue quality issues or working capital consumption that bears investigation. However, CFFO/NI of 1.35 is healthy, and the FCF/NI ratio of 1.03 shows earnings are ultimately backed by cash. The Z-Score of 2.02 sits in the grey zone. CBRE is a capital-light services business that generates fees, making the debt load more manageable than the ratios suggest.
| Metric | Result |
|---|---|
| Red Flags | **3** (financial 3 + management 0; Revenue/CFFO divergence, Cash-to-debt 19%, Goodwill 113% of equity) |
| Watch Items | **2** (financial 2 + management 0; Debt/EBITDA 4.9x, FCF after acquisitions negative 2/3 years) |
| Checks Completed | **20/23** (financial 15/18 + management 5/5 G1-G5; 3 N/A) |
| Beneish M-Score | N/A (insufficient data) |
| Altman Z-Score | **2.02** (grey zone) |
| Auditor | KPMG LLP — Unqualified opinion |
Revenue: Services Giant
Per the 10-K (in millions):
| Category | FY2024 | FY2025 | Change |
|---|---|---|---|
| Resilient Business Lines | $29,191 | $33,112 | +13.4% |
| Transactional Business Lines | $6,593 | $7,488 | +13.6% |
| Corporate/Eliminations | ($17) | ($50) | — |
| **Total Revenue** | **$35,767** | **$40,550** | **+13.4%** |
| Metric | FY2024 | FY2025 |
|---|---|---|
| Net Income | $1,036 | $1,277* |
| Net Cash from Operations | $1,707 | $1,559 |
*Net income of $1,277M includes the full CBRE entity; attributable net income may differ.
The A3 red flag — revenue up 13.4% while CFFO down 8.7% — is the key finding. Per the filing: "Net cash provided by operating activities totaled $1,559 million for the year ended December 31, 2025 as compared to net cash provided by operating activities" of approximately $1,707M in FY2024. This $148M decline despite $4.8B revenue growth suggests working capital consumption — likely from the J&J Worldwide Services acquisition (closed February 2025) and higher receivables from the transactional brokerage business.
The balance sheet shows cash of $1,864M (up from $1,114M) but restricted cash of $150M and total receivables net of $125M allowance. Goodwill increased modestly from acquisitions, with the filing showing "Goodwill $33M" from in-fill acquisitions and a larger amount from J&J Worldwide Services.
Acquisition Activity
The filing notes the J&J Worldwide Services acquisition (February 27, 2025), adding government facilities management. CBRE also completed multiple in-fill acquisitions. FCF after acquisitions was negative in 2 of 3 years, reflecting CBRE's acquisition-driven growth strategy.
The 18-Point Screening
| # | Check | Result | Detail |
|---|---|---|---|
| A1-A2 | AR Checks | ✅ | DSO 75 days (+3), AR +18.3% vs revenue +13.4% |
| A3 | Revenue vs CFFO | ❌ | Revenue +13.4% but CFFO -8.7% |
| B1-B4 | Expense Quality | ✅ | 18.7% gross margin (services business) |
| C1-C3 | Cash Flow | ✅ | CFFO/NI 1.35, FCF $1.2B, low accruals |
| C4 | Cash vs Debt | ❌ | Cash $1.9B = 19% of $10.0B debt |
| D1 | Goodwill | ❌ | $10.0B = 113% of equity |
| D2 | Leverage | ⚠️ | Debt/EBITDA = 4.9x |
| E1 | Serial Acquirer | ⚠️ | FCF after acquisitions negative 2/3 years |
| F1 | M-Score | — | Insufficient data |
| **G1-G5** | **Management signals (new)** | **✅✅✅✅✅** |
Management Signals (New G1-G5 Framework)
**Why separate management signals?** Schilit's *Financial Shenanigans* treats abrupt executive, auditor, and director departures as important early-warning signals. 8-K Item 5.02 executive/director changes and auditor-change filings help separate clean financial statements from governance or continuity risk.
| # | Check | Result | Detail |
|---|---|---|---|
| G1 | CEO change | ✅ | No abnormal signal in the last 18 months |
| G2 | CFO / key financial officer change | ✅ | No abnormal signal in the last 18 months |
| G3 | Independent director / audit committee departure | ✅ | No abnormal signal in the last 18 months |
| G4 | Key operating or legal leader departure | ✅ | No abnormal signal in the last 18 months |
| G5 | Auditor change | ✅ | No abnormal signal in the last 18 months |
Data source: SEC EDGAR 8-K filings filtered for Item 5.02 + management-signals-by-ticker.json
Summary
Grade: F driven by acquisition leverage and a genuine revenue/cash flow divergence. The A3 fail — revenue growing while CFFO declines — is the most actionable finding. While the absolute cash flow levels remain healthy (CFFO/NI 1.35), the directional divergence warrants monitoring in FY2026 to ensure it was acquisition-driven rather than a quality deterioration in the core brokerage and services business.
**Disclaimer**: This report is based on CBRE's FY2025 10-K filed with SEC EDGAR on February 12, 2026. This is NOT investment advice.
Data: SEC EDGAR 10-K + Yahoo Finance
Auditor: KPMG LLP (Unqualified opinion)
Fiscal year ended: December 31, 2025