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CF Industries Holdings Inc (NYSE:CF)
Beneish M-Score
-2.13 (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 -2.13 signals that the company is a manipulator.

CF' s Beneish M-Score Range Over the Past 10 Years
Min: -3.27   Max: -0.02
Current: -2.13

-3.27
-0.02

During the past 13 years, the highest Beneish M-Score of CF Industries Holdings Inc was -0.02. The lowest was -3.27. And the median was -2.60.


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 * 1.642+0.528 * 1.2406+0.404 * 0.6974+0.892 * 0.9549+0.115 * 1.1905
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.7124+4.679 * -0.0333-0.327 * 0.8505
=-2.13

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

This Year (Mar16) TTM:Last Year (Mar15) TTM:
Accounts Receivable was $262 Mil.
Revenue was 1004 + 1115.8 + 927.4 + 1311.5 = $4,359 Mil.
Gross Profit was 217 + 280.4 + 165 + 685.9 = $1,348 Mil.
Total Current Assets was $3,520 Mil.
Total Assets was $15,581 Mil.
Property, Plant and Equipment(Net PPE) was $9,052 Mil.
Depreciation, Depletion and Amortization(DDA) was $511 Mil.
Selling, General & Admin. Expense(SGA) was $246 Mil.
Total Current Liabilities was $1,273 Mil.
Long-Term Debt was $5,539 Mil.
Net Income was 26 + 26.5 + 90.9 + 351.9 = $495 Mil.
Non Operating Income was -2 + 13.1 + -12.7 + -2.9 = $-5 Mil.
Cash Flow from Operations was 346 + 132.2 + 572.7 + -32.2 = $1,019 Mil.
Accounts Receivable was $167 Mil.
Revenue was 954 + 1216.5 + 921.4 + 1472.7 = $4,565 Mil.
Gross Profit was 416 + 444.3 + 301.1 + 590.3 = $1,752 Mil.
Total Current Assets was $2,380 Mil.
Total Assets was $11,485 Mil.
Property, Plant and Equipment(Net PPE) was $5,925 Mil.
Depreciation, Depletion and Amortization(DDA) was $402 Mil.
Selling, General & Admin. Expense(SGA) was $150 Mil.
Total Current Liabilities was $1,311 Mil.
Long-Term Debt was $4,593 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)
=(262 / 4358.7) / (167.1 / 4564.6)
=0.06010967 / 0.03660781
=1.642

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)
=(1751.7 / 4564.6) / (1348.3 / 4358.7)
=0.38375761 / 0.30933535
=1.2406

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 - (3520 + 9052) / 15581) / (1 - (2379.7 + 5925) / 11485.3)
=0.19311983 / 0.2769279
=0.6974

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
=4358.7 / 4564.6
=0.9549

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))
=(402.2 / (402.2 + 5925)) / (510.6 / (510.6 + 9052))
=0.06356682 / 0.05339552
=1.1905

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)
=(245.6 / 4358.7) / (150.2 / 4564.6)
=0.05634708 / 0.0329054
=1.7124

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)
=((5539 + 1273) / 15581) / ((4592.5 + 1311.3) / 11485.3)
=0.43719915 / 0.51403098
=0.8505

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
=(495.3 - -4.5 - 1018.7) / 15581
=-0.0333

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 -2.13 signals that the company is likely to 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

Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15
DSRI 2.11170.92330.82791.43720.93880.72640.7981.17670.95261.2462
GMI 1.45180.31070.77940.9691.08180.62650.9311.1081.22771.0442
AQI 2.62051.16752.24541.36762.37940.96150.88761.08630.76890.8489
SGI 1.02151.41411.42240.66521.52011.53791.0010.89690.86640.9083
DEPI 0.97971.14620.90291.17091.23520.91171.03161.06781.37211.2471
SGAI 0.75040.88760.74521.30421.10970.79671.16651.21921.05621.6431
LVGI 0.98561.13711.08730.56681.70540.89120.84981.46591.34651.0794
TATA -0.1104-0.13140.0679-0.1319-0.0978-0.0602-0.05190.0049-0.0005-0.0392
M-score -1.02-3.10-1.55-2.75-2.15-2.69-2.97-2.48-2.70-2.66

CF Industries Holdings Inc Quarterly Data

Dec13Mar14Jun14Sep14Dec14Mar15Jun15Sep15Dec15Mar16
DSRI 1.17670.9971.02840.97390.95260.89450.86171.7671.24611.642
GMI 1.1081.19871.22891.15471.22771.13110.95421.02371.04411.2406
AQI 1.08630.77880.8670.86820.76891.05250.9880.87690.84890.6974
SGI 0.89690.89140.85340.8620.86640.8660.87570.90860.90840.9549
DEPI 1.06781.11481.15231.22521.37211.3711.34421.37661.24711.1905
SGAI 1.21921.12941.12151.18311.05621.06141.07131.01761.64221.7124
LVGI 1.46591.73131.31091.30261.34651.06381.03431.10271.07940.8505
TATA 0.00460.01830.01120.0224-0.0015-0.0241-0.0364-0.0296-0.0392-0.0333
M-score -2.48-2.73-2.57-2.60-2.70-2.71-2.90-2.02-2.66-2.13
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