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CF Industries Holdings Inc (NYSE:CF)
Beneish M-Score
-2.70 (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 -2.70 suggests that the company is not a manipulator.

CF' s 10-Year Beneish M-Score Range
Min: -3.21   Max: -1.76
Current: -2.7

-3.21
-1.76

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 -2.69.


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 * 0.9526+0.528 * 1.2277+0.404 * 0.7632+0.892 * 0.8664+0.115 * 1.3721
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0562+4.679 * -0.0008-0.327 * 1.3365
=-2.70

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

This Year (Dec14) TTM:Last Year (Dec13) TTM:
Accounts Receivable was $186 Mil.
Revenue was 1216.5 + 921.4 + 1472.7 + 1132.6 = $4,743 Mil.
Gross Profit was 444.3 + 301.1 + 590.3 + 442.8 = $1,779 Mil.
Total Current Assets was $2,615 Mil.
Total Assets was $11,338 Mil.
Property, Plant and Equipment(Net PPE) was $5,526 Mil.
Depreciation, Depletion and Amortization(DDA) was $393 Mil.
Selling, General & Admin. Expense(SGA) was $152 Mil.
Total Current Liabilities was $980 Mil.
Long-Term Debt was $4,593 Mil.
Net Income was 238.3 + 130.9 + 312.6 + 708.5 = $1,390 Mil.
Non Operating Income was -3.8 + -2.2 + -3.1 + 0.1 = $-9 Mil.
Cash Flow from Operations was 231.7 + 621.6 + -194.7 + 750 = $1,409 Mil.
Accounts Receivable was $225 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.



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)
=(185.7 / 4743.2) / (225 / 5474.7)
=0.03915078 / 0.04109814
=0.9526

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)
=(301.1 / 5474.7) / (444.3 / 4743.2)
=0.46033573 / 0.37495783
=1.2277

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 - (2614.5 + 5525.8) / 11338.2) / (1 - (2630.1 + 4101.7) / 10678.1)
=0.28204653 / 0.36956949
=0.7632

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
=4743.2 / 5474.7
=0.8664

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))
=(410.6 / (410.6 + 4101.7)) / (392.5 / (392.5 + 5525.8))
=0.09099572 / 0.06631972
=1.3721

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)
=(151.9 / 4743.2) / (166 / 5474.7)
=0.03202479 / 0.0303213
=1.0562

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)
=((4592.5 + 979.7) / 11338.2) / ((3098.1 + 828.3) / 10678.1)
=0.49145367 / 0.36770587
=1.3365

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
=(1390.3 - -9 - 1408.6) / 11338.2
=-0.0008

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 -2.70 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 2.08820.96280.82791.43720.93880.72640.7981.17670.9526
GMI 1.46810.29790.77940.9691.08180.62650.9311.1081.2277
AQI 2.62051.16752.24541.36762.37940.96150.88761.08630.7632
SGI 1.0331.3561.42240.66521.52011.53791.0010.89690.8664
DEPI 0.97971.14620.90291.17091.23520.91171.03161.06781.3721
SGAI 1.03340.66460.69891.39051.10970.79671.33481.06551.0562
LVGI 0.98561.13711.08730.56681.70540.89120.84981.46591.3365
TATA -0.1327-0.1590.019-0.1319-0.0978-0.0602-0.05190.0063-0.0005
M-score -1.17-3.21-1.77-2.77-2.15-2.69-2.99-2.44-2.70

CF Industries Holdings Inc Quarterly Data

Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14Dec14
DSRI 1.12430.7980.56960.88540.61751.17670.9971.02840.97390.9526
GMI 0.85430.9310.91821.03731.14211.1081.19871.22891.15471.2277
AQI 0.90720.88760.94280.89580.95491.08630.77880.8670.86820.7632
SGI 1.12891.0010.91650.92280.88780.89690.89140.85340.8620.8664
DEPI 0.99831.03161.00291.11131.14011.06781.11481.15231.22521.3721
SGAI 1.04331.33481.51341.42621.38971.06550.99510.99041.04161.0562
LVGI 0.81560.84980.93571.51341.35141.46591.73131.31091.30261.3365
TATA -0.0217-0.0519-0.0494-0.0057-0.01660.0060.01920.01220.0234-0.0008
M-score -2.41-2.99-3.31-2.93-3.12-2.45-2.70-2.54-2.57-2.70
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