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CF Industries Holdings Inc (NYSE:CF)
Beneish M-Score
-2.70 (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 -2.70 suggests that the company is not a manipulator.

CF' s 10-Year Beneish M-Score Range
Min: -3.31   Max: -0.02
Current: -2.7

-3.31
-0.02

During the past 13 years, the highest Beneish M-Score of CF Industries Holdings Inc was -0.02. The lowest was -3.31. And the median was -2.44.


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 * 0.997+0.528 * 1.1987+0.404 * 0.7788+0.892 * 0.8914+0.115 * 1.1148
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9951+4.679 * 0.0183-0.327 * 1.7313
=-2.70

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

This Year (Mar14) TTM:Last Year (Mar13) TTM:
Accounts Receivable was $216 Mil.
Revenue was 1132.6 + 1326.3 + 1097 + 1714.9 = $5,271 Mil.
Gross Profit was 442.8 + 593.8 + 386.1 + 865.2 = $2,288 Mil.
Total Current Assets was $4,911 Mil.
Total Assets was $12,476 Mil.
Property, Plant and Equipment(Net PPE) was $4,282 Mil.
Depreciation, Depletion and Amortization(DDA) was $409 Mil.
Selling, General & Admin. Expense(SGA) was $163 Mil.
Total Current Liabilities was $1,436 Mil.
Long-Term Debt was $4,592 Mil.
Net Income was 708.5 + 325.8 + 234.1 + 498.2 = $1,767 Mil.
Non Operating Income was 0.1 + -0.4 + 0.3 + 0.3 = $0 Mil.
Cash Flow from Operations was 750 + 37.5 + 861 + -110.4 = $1,538 Mil.
Accounts Receivable was $243 Mil.
Revenue was 1336.5 + 1481.4 + 1359.4 + 1735.6 = $5,913 Mil.
Gross Profit was 675.1 + 656.2 + 702 + 1043.3 = $3,077 Mil.
Total Current Assets was $2,908 Mil.
Total Assets was $10,338 Mil.
Property, Plant and Equipment(Net PPE) was $3,938 Mil.
Depreciation, Depletion and Amortization(DDA) was $424 Mil.
Selling, General & Admin. Expense(SGA) was $184 Mil.
Total Current Liabilities was $1,285 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)
=(215.7 / 5270.8) / (242.7 / 5912.9)
=0.04092358 / 0.04104585
=0.997

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)
=(593.8 / 5912.9) / (442.8 / 5270.8)
=0.52031998 / 0.43407073
=1.1987

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 - (4911.1 + 4281.9) / 12475.5) / (1 - (2907.7 + 3938.1) / 10338.4)
=0.26311571 / 0.3378279
=0.7788

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
=5270.8 / 5912.9
=0.8914

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))
=(423.8 / (423.8 + 3938.1)) / (408.8 / (408.8 + 4281.9))
=0.09715949 / 0.08715117
=1.1148

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)
=(163.4 / 5270.8) / (184.2 / 5912.9)
=0.03100099 / 0.03115223
=0.9951

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)
=((4592.3 + 1435.7) / 12475.5) / ((1600 + 1285.3) / 10338.4)
=0.48318705 / 0.27908574
=1.7313

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
=(1766.6 - 0.3 - 1538.1) / 12475.5
=0.0183

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 -2.70 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

Dec11Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14
DSRI 0.73321.28360.68181.12430.80620.56960.88540.61751.18420.997
GMI 0.62650.71120.78160.85430.9310.91821.03731.14211.1081.1987
AQI 0.96150.95261.01850.90720.88760.94280.89580.95491.08630.7788
SGI 1.53791.39141.24461.12891.0010.91650.92280.88780.89690.8914
DEPI 0.91171.12890.97730.99831.03161.00291.11131.14011.06781.1148
SGAI 0.79670.78940.92051.04331.33481.51341.42621.38971.06550.9951
LVGI 0.89120.91460.82410.81560.84980.93571.51341.35141.46591.7313
TATA -0.0589-0.0389-0.0478-0.0217-0.0519-0.0494-0.0061-0.01730.00490.0183
M-score -2.67-2.14-2.82-2.41-2.99-3.31-2.93-3.12-2.44-2.70
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