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CF Industries Holdings Inc (NYSE:CF)
Beneish M-Score
-2.57 (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 -2.57 suggests that the company is not a manipulator.

CF' s 10-Year Beneish M-Score Range
Min: -3.28   Max: -0.01
Current: -2.57

-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 -2.49.


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 * 1.0284+0.528 * 1.2289+0.404 * 0.867+0.892 * 0.8534+0.115 * 1.1523
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.1215+4.679 * 0.0115-0.327 * 1.3109
=-2.57

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

This Year (Jun14) TTM:Last Year (Jun13) TTM:
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.
Net Income was 312.6 + 708.5 + 325.8 + 234.1 = $1,581 Mil.
Non Operating Income was -3.1 + 0.1 + -0.4 + 0.3 = $-3 Mil.
Cash Flow from Operations was -194.7 + 750 + 37.5 + 861 = $1,454 Mil.
Accounts Receivable was $294 Mil.
Revenue was 1714.9 + 1336.5 + 1481.4 + 1359.4 = $5,892 Mil.
Gross Profit was 865.2 + 675.1 + 656.2 + 702 = $2,899 Mil.
Total Current Assets was $2,720 Mil.
Total Assets was $10,252 Mil.
Property, Plant and Equipment(Net PPE) was $4,087 Mil.
Depreciation, Depletion and Amortization(DDA) was $415 Mil.
Selling, General & Admin. Expense(SGA) was $166 Mil.
Total Current Liabilities was $577 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)
=(258.3 / 5028.6) / (294.3 / 5892.2)
=0.05136619 / 0.04994739
=1.0284

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)
=(442.8 / 5892.2) / (590.3 / 5028.6)
=0.49192152 / 0.40031023
=1.2289

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 - (3405.7 + 4605.1) / 11304.9) / (1 - (2719.5 + 4086.5) / 10251.6)
=0.29138692 / 0.33610363
=0.867

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
=5028.6 / 5892.2
=0.8534

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))
=(414.5 / (414.5 + 4086.5)) / (400 / (400 + 4605.1))
=0.09209065 / 0.07991848
=1.1523

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)
=(158.4 / 5028.6) / (165.5 / 5892.2)
=0.03149982 / 0.02808798
=1.1215

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 + 720.3) / 11304.9) / ((3098 + 577.1) / 10251.6)
=0.46994666 / 0.35849038
=1.3109

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
=(1581 - -3.1 - 1453.8) / 11304.9
=0.0115

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 -2.57 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 1.07732.06860.92330.82791.43720.93880.73320.80621.1842
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 -2.90-1.08-3.23-1.79-2.75-2.15-2.68-2.96-2.47

CF Industries Holdings Inc Quarterly Data

Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14
DSRI 1.28360.68181.12430.80620.56960.88540.61751.18420.9971.0284
GMI 0.71120.78160.85430.9310.91821.03731.14211.1081.19871.2289
AQI 0.95261.01850.90720.88760.94280.89580.95491.08630.77880.867
SGI 1.39141.24461.12891.0010.91650.92280.88780.89690.89140.8534
DEPI 1.12890.97730.99831.03161.00291.11131.14011.06781.11481.1523
SGAI 0.78940.92051.04331.16651.33351.25951.22351.21921.12941.1215
LVGI 0.91460.82410.81560.84980.93571.51341.35141.46591.73131.3109
TATA -0.0374-0.0493-0.0241-0.0504-0.0479-0.0028-0.01330.00530.01860.0115
M-score -2.14-2.82-2.43-2.95-3.28-2.89-3.07-2.47-2.73-2.57
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