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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.
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.
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|
* 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
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)|
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.
|=||(GrossProfit_t-1 / Revenue_t-1)||/||(GrossProfit_t / Revenue_t)|
|=||(386.1 / 6104)||/||(593.8 / 5474.7)|
3. AQI = Asset Quality Index
AQI is the ratio of asset quality in year t to year t-1.
|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)|
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.
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))|
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)|
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)|
8. TATA = Total Accruals to Total Assets
Total accruals calculated as the change in working capital accounts other than cash less depreciation.
|=||(NetIncome_t - NonOperatingIncome_t||-||CashFlowsfromOperations_t)||/||TotalAssets_t|
|=||(1464.6 - -54.5||-||1466.8)||/||10678.1|
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.
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
CF Industries Holdings Inc Annual Data
CF Industries Holdings Inc Quarterly Data