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CF Industries Holdings Inc (NYSE:CF)
Beneish M-Score
-2.44 (As of Today)

The zones of discrimination for M-Score is as such:

An M-Score of less than -2.22 suggests that the company is not an accounting manipulator.
An M-Score of greater than -2.22 signals that the company is likely an accounting manipulator.

CF Industries Holdings Inc has a M-score of -2.44 suggests that the company is not a manipulator.

CF' s 10-Year Beneish M-Score Range
Min: -3.21   Max: -1.76
Current: -2.44

-3.21
-1.76

During the past 13 years, the highest Beneish M-Score of CF Industries Holdings Inc was -1.76. The lowest was -3.21. And the median was -2.67.


Definition

The M-score was created by Professor Messod Beneish. Instead of measuring the bankruptcy risk (Z-Score) or business trend (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 CF Industries Holdings Inc 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 * 1.1842+0.528 * 1.108+0.404 * 1.0863+0.892 * 0.8969+0.115 * 1.0678
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0655+4.679 * 0.0049-0.327 * 1.4659
=-2.44

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.

This Year (Dec13) TTM:Last Year (Dec12) TTM:
Accounts Receivable was $231 Mil.
Revenue was 1326.3 + 1097 + 1714.9 + 1336.5 = $5,475 Mil.
Gross Profit was 593.8 + 386.1 + 865.2 + 675.1 = $2,520 Mil.
Total Current Assets was $2,630 Mil.
Total Assets was $10,678 Mil.
Property, Plant and Equipment(Net PPE) was $4,102 Mil.
Depreciation, Depletion and Amortization(DDA) was $411 Mil.
Selling, General & Admin. Expense(SGA) was $166 Mil.
Total Current Liabilities was $828 Mil.
Long-Term Debt was $3,098 Mil.
Net Income was 325.8 + 234.1 + 498.2 + 406.5 = $1,465 Mil.
Non Operating Income was -0.4 + 0.3 + 0.3 + -54.7 = $-55 Mil.
Cash Flow from Operations was 37.5 + 861 + -110.4 + 678.7 = $1,467 Mil.
Accounts Receivable was $217 Mil.
Revenue was 1481.4 + 1359.4 + 1735.6 + 1527.6 = $6,104 Mil.
Gross Profit was 656.2 + 702 + 1043.3 + 711.8 = $3,113 Mil.
Total Current Assets was $2,808 Mil.
Total Assets was $10,167 Mil.
Property, Plant and Equipment(Net PPE) was $3,901 Mil.
Depreciation, Depletion and Amortization(DDA) was $420 Mil.
Selling, General & Admin. Expense(SGA) was $174 Mil.
Total Current Liabilities was $950 Mil.
Long-Term Debt was $1,600 Mil.



1. DSRI = Days Sales in Receivables Index

Measured as the ratio of days’ sales in 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)
=(230.9 / 5474.7) / (217.4 / 6104)
=0.04217583 / 0.03561599
=1.1842

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)
=(386.1 / 6104) / (593.8 / 5474.7)
=0.5100426 / 0.46033573
=1.108

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 plant, property and equipment to total assets.

AQI=(1 - (CurrentAssets_t + PPE_t) / TotalAssets_t) / (1 - (CurrentAssets_t-1 + PPE_t-1) / TotalAssets_t-1)
=(1 - (2630.1 + 4101.7) / 10678.1) / (1 - (2807.6 + 3900.5) / 10166.9)
=0.36956949 / 0.34020203
=1.0863

4. SGI = Sales Growth Index

Ratio of sales 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
=5474.7 / 6104
=0.8969

5. DEPI = Depreciation Index

Measured as the ratio of the rate of depreciation 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))
=(419.8 / (419.8 + 3900.5)) / (410.6 / (410.6 + 4101.7))
=0.09716918 / 0.09099572
=1.0678

6. SGAI = Sales, General and Administrative expenses Index

The ratio of SGA expenses 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)
=(166 / 5474.7) / (173.7 / 6104)
=0.0303213 / 0.02845675
=1.0655

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$sgai= in leverage

LVGI=((LTD_t + CurrentLiabilities_t) / TotalAssets_t) / ((LTD_t-1 + CurrentLiabilities_t-1) / TotalAssets_t-1)
=((3098.1 + 828.3) / 10678.1) / ((1600 + 950.2) / 10166.9)
=0.36770587 / 0.25083359
=1.4659

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
=(1464.6 - -54.5 - 1466.8) / 10678.1
=0.0049

An M-Score of less than -2.22 suggests that the company will not be a manipulator. An M-Score of greater than -2.22 signals that the company is likely to be a manipulator.

CF Industries Holdings Inc has a M-score of -2.44 suggests that the company will not be a manipulator.


Related Terms

Altman Z-Score, Piotroski F-Score, Accounts Receivable, Revenue, Gross Profit, Total Current Assets, Total Assets, Property, Plant and Equipment, Depreciation, Depletion and Amortization, Selling, General & Admin. Expense, Total Current Liabilities, Long-Term Debt, Net Income, Non Operating Income, Cash Flow from Operations


Historical Data

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.

CF Industries Holdings Inc Annual Data

Dec04Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13
DSRI 1.04482.04560.96280.82791.43720.93880.73320.80621.1842
GMI 1.23161.46810.29790.77940.9691.08180.62650.9311.108
AQI 0.2452.62051.16752.24541.36762.37940.96150.88761.0863
SGI 1.19221.0331.3561.42240.66521.52011.53791.0010.8969
DEPI 1.07490.97971.14620.90291.17091.23520.91171.03161.0678
SGAI 0.89181.03340.66460.69891.39051.10970.79671.33481.0655
LVGI 0.65530.98561.13711.08730.56681.70540.89120.84981.4659
TATA -0.1203-0.1327-0.1590.019-0.1319-0.0978-0.0602-0.05190.0049
M-score -2.87-1.21-3.21-1.77-2.77-2.15-2.68-2.99-2.44

CF Industries Holdings Inc Quarterly Data

Sep11Dec11Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13
DSRI 0.67590.73321.28360.68181.12430.80620.56960.88540.61751.1842
GMI 0.56760.62650.71120.78160.85430.9310.91821.03731.14211.108
AQI 0.92110.96150.95261.01850.90720.88760.94280.89580.95491.0863
SGI 1.73681.53791.39141.24461.12891.0010.91650.92280.88780.8969
DEPI 0.73580.91171.12890.97730.99831.03161.00291.11131.14011.0678
SGAI 0.81330.79670.78940.92051.04331.33481.51341.42621.38971.0655
LVGI 0.97410.89120.91460.82410.81560.84980.93571.51341.35141.4659
TATA -0.1339-0.0589-0.0389-0.0478-0.0217-0.0519-0.0494-0.0061-0.01730.0049
M-score -3.00-2.67-2.14-2.82-2.41-2.99-3.31-2.93-3.12-2.44
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