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CF Industries Holdings Inc (NYSE:CF)
Beneish M-Score
-2.90 (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 -2.90 suggests that the company is not a manipulator.

CF' s 10-Year Beneish M-Score Range
Min: -3.31   Max: -0.02
Current: -2.9

-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 -2.56.


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 * 0.8618+0.528 * 0.9542+0.404 * 0.988+0.892 * 0.8756+0.115 * 1.3442
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0721+4.679 * -0.0355-0.327 * 1.0343
=-2.90

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

This Year (Jun15) TTM:Last Year (Jun14) TTM:
Accounts Receivable was $195 Mil.
Revenue was 1311.5 + 953.6 + 1216.5 + 921.4 = $4,403 Mil.
Gross Profit was 685.9 + 415.8 + 444.3 + 301.1 = $1,847 Mil.
Total Current Assets was $1,366 Mil.
Total Assets was $10,998 Mil.
Property, Plant and Equipment(Net PPE) was $6,466 Mil.
Depreciation, Depletion and Amortization(DDA) was $409 Mil.
Selling, General & Admin. Expense(SGA) was $149 Mil.
Total Current Liabilities was $754 Mil.
Long-Term Debt was $4,593 Mil.
Net Income was 351.9 + 230.6 + 238.3 + 130.9 = $952 Mil.
Non Operating Income was -2.9 + -1.4 + -3.8 + -2.2 = $-10 Mil.
Cash Flow from Operations was -32.1 + 530.9 + 231.7 + 621.6 = $1,352 Mil.
Accounts Receivable was $258 Mil.
Revenue was 1472.7 + 1132.6 + 1326.3 + 1097 = $5,029 Mil.
Gross Profit was 590.3 + 442.8 + 593.8 + 386.1 = $2,013 Mil.
Total Current Assets was $3,406 Mil.
Total Assets was $11,305 Mil.
Property, Plant and Equipment(Net PPE) was $4,605 Mil.
Depreciation, Depletion and Amortization(DDA) was $400 Mil.
Selling, General & Admin. Expense(SGA) was $158 Mil.
Total Current Liabilities was $720 Mil.
Long-Term Debt was $4,592 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)
=(194.9 / 4403) / (258.3 / 5028.6)
=0.04426527 / 0.05136619
=0.8618

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)
=(415.8 / 5028.6) / (685.9 / 4403)
=0.40031023 / 0.41950943
=0.9542

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 - (1366.4 + 6465.6) / 10998.4) / (1 - (3405.7 + 4605.1) / 11304.9)
=0.28789642 / 0.29138692
=0.988

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
=4403 / 5028.6
=0.8756

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))
=(400 / (400 + 4605.1)) / (408.7 / (408.7 + 6465.6))
=0.07991848 / 0.05945333
=1.3442

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)
=(148.7 / 4403) / (158.4 / 5028.6)
=0.03377243 / 0.03149982
=1.0721

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)
=((4592.6 + 753.5) / 10998.4) / ((4592.4 + 720.3) / 11304.9)
=0.48607979 / 0.46994666
=1.0343

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
=(951.7 - -10.3 - 1352.1) / 10998.4
=-0.0355

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 -2.90 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

Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14
DSRI 1.06692.08820.96280.82791.43720.93880.72640.7981.17670.9526
GMI 1.23161.46810.29790.77940.9691.08180.62650.9311.1081.2277
AQI 0.2452.62051.16752.24541.36762.37940.96150.88761.08630.7632
SGI 1.19221.0331.3561.42240.66521.52011.53791.0010.89690.8664
DEPI 1.07490.97971.14620.90291.17091.23520.91171.03161.06781.3721
SGAI 0.89181.03340.66460.69891.39051.10970.79671.33481.06551.0562
LVGI 0.65530.98561.13711.08730.56681.70540.89120.84981.46591.3365
TATA -0.1203-0.1327-0.1590.019-0.1319-0.0978-0.0602-0.05190.0063-0.0005
M-score -2.85-1.17-3.21-1.77-2.77-2.15-2.69-2.99-2.44-2.70

CF Industries Holdings Inc Quarterly Data

Mar13Jun13Sep13Dec13Mar14Jun14Sep14Dec14Mar15Jun15
DSRI 0.56960.88540.61751.17670.9971.02840.97390.95260.89460.8618
GMI 0.91821.03731.14211.1081.19871.22891.15471.22771.13110.9542
AQI 0.94280.89580.95491.08630.77880.8670.86820.76321.05250.988
SGI 0.91650.92280.88780.89690.89140.85340.8620.86640.86590.8756
DEPI 1.00291.11131.14011.06781.11481.15231.22521.37211.36971.3442
SGAI 1.51341.42621.38971.06550.99510.99041.04161.05621.06221.0721
LVGI 0.93571.51341.35141.46591.73131.31091.30261.33651.06381.0343
TATA -0.0494-0.0057-0.01660.0060.01950.01250.0237-0.0005-0.0232-0.0355
M-score -3.31-2.93-3.12-2.45-2.70-2.54-2.57-2.70-2.70-2.90
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