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CF Industries Holdings Inc (NYSE:CF)
Beneish M-Score
-2.60 (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 -2.60 suggests that the company is not a manipulator.

CF' s 10-Year Beneish M-Score Range
Min: -3.28   Max: -0.01
Current: -2.6

-3.28
-0.01

During the past 13 years, the highest Beneish M-Score of CF Industries Holdings Inc was -0.01. The lowest was -3.28. And the median was -2.50.


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 * 0.9739+0.528 * 1.1547+0.404 * 0.8682+0.892 * 0.862+0.115 * 1.2252
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.1831+4.679 * 0.0221-0.327 * 1.3026
=-2.60

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

This Year (Sep14) TTM:Last Year (Sep13) TTM:
Accounts Receivable was $157 Mil.
Revenue was 921.4 + 1472.7 + 1132.6 + 1326.3 = $4,853 Mil.
Gross Profit was 301.1 + 590.3 + 442.8 + 593.8 = $1,928 Mil.
Total Current Assets was $3,339 Mil.
Total Assets was $11,660 Mil.
Property, Plant and Equipment(Net PPE) was $5,050 Mil.
Depreciation, Depletion and Amortization(DDA) was $395 Mil.
Selling, General & Admin. Expense(SGA) was $164 Mil.
Total Current Liabilities was $1,049 Mil.
Long-Term Debt was $4,592 Mil.
Net Income was 130.9 + 312.6 + 708.5 + 325.8 = $1,478 Mil.
Non Operating Income was -2.2 + -3.1 + 0.1 + 11 = $6 Mil.
Cash Flow from Operations was 621.6 + -194.7 + 750 + 37.5 = $1,214 Mil.
Accounts Receivable was $187 Mil.
Revenue was 1097 + 1714.9 + 1336.5 + 1481.4 = $5,630 Mil.
Gross Profit was 386.1 + 865.2 + 675.1 + 656.2 = $2,583 Mil.
Total Current Assets was $3,060 Mil.
Total Assets was $10,799 Mil.
Property, Plant and Equipment(Net PPE) was $4,250 Mil.
Depreciation, Depletion and Amortization(DDA) was $415 Mil.
Selling, General & Admin. Expense(SGA) was $161 Mil.
Total Current Liabilities was $913 Mil.
Long-Term Debt was $3,098 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)
=(156.9 / 4853) / (186.9 / 5629.8)
=0.03233052 / 0.03319834
=0.9739

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)
=(590.3 / 5629.8) / (301.1 / 4853)
=0.45873743 / 0.39728003
=1.1547

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 - (3338.7 + 5050.2) / 11659.8) / (1 - (3059.7 + 4250) / 10799)
=0.28052797 / 0.32311325
=0.8682

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
=4853 / 5629.8
=0.862

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))
=(414.9 / (414.9 + 4250)) / (395.3 / (395.3 + 5050.2))
=0.08894081 / 0.07259205
=1.2252

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)
=(164.4 / 4853) / (161.2 / 5629.8)
=0.03387595 / 0.02863334
=1.1831

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)
=((4592.4 + 1048.8) / 11659.8) / ((3098 + 912.9) / 10799)
=0.48381619 / 0.37141402
=1.3026

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
=(1477.8 - 5.8 - 1214.4) / 11659.8
=0.0221

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 -2.60 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 1.10022.11170.92330.82791.43720.93880.73320.79061.1767
GMI 1.19431.45180.31070.77940.9691.08180.62650.9311.108
AQI 0.2452.62051.16752.24541.36762.37940.96150.88761.0863
SGI 1.15611.02151.41411.42240.66521.52011.53791.0010.8969
DEPI 1.07490.97971.14620.90291.17091.23520.91171.03161.0678
SGAI 0.91960.75040.88760.74521.30421.10970.79671.16651.2192
LVGI 0.65530.98561.13711.08730.56681.70540.89120.84981.4659
TATA -0.1203-0.1161-0.1590.0172-0.1319-0.0978-0.0602-0.05190.0049
M-score -2.88-1.04-3.23-1.79-2.75-2.15-2.68-2.97-2.48

CF Industries Holdings Inc Quarterly Data

Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14
DSRI 0.68181.12430.79060.56960.88540.61751.17670.9971.02840.9739
GMI 0.78160.85430.9310.91821.03731.14211.1081.19871.22891.1547
AQI 1.01850.90720.88760.94280.89580.95491.08630.77880.8670.8682
SGI 1.24461.12891.0010.91650.92280.88780.89690.89140.85340.862
DEPI 0.97730.99831.03161.00291.11131.14011.06781.11481.15231.2252
SGAI 0.92051.04331.16651.33351.25951.22351.21921.12941.12151.1831
LVGI 0.82410.81560.84980.93571.51341.35141.46591.73131.31091.3026
TATA -0.0493-0.0241-0.0504-0.0479-0.0028-0.01290.00460.0180.01090.0221
M-score -2.82-2.43-2.97-3.28-2.89-3.07-2.48-2.73-2.57-2.60
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