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CF Industries Holdings Inc (NYSE:CF)
Beneish M-Score
-2.02 (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 -2.02 signals that the company is a manipulator.

CF' s Beneish M-Score Range Over the Past 10 Years
Min: -3.31   Max: -0.02
Current: -2.02

-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 -2.59.


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 * 1.7672+0.528 * 1.0237+0.404 * 0.8769+0.892 * 0.9085+0.115 * 1.3766
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0184+4.679 * -0.0288-0.327 * 1.1027
=-2.02

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

This Year (Sep15) TTM:Last Year (Sep14) TTM:
Accounts Receivable was $252 Mil.
Revenue was 927.4 + 1311.5 + 953.6 + 1216.5 = $4,409 Mil.
Gross Profit was 165 + 685.9 + 415.8 + 444.3 = $1,711 Mil.
Total Current Assets was $1,764 Mil.
Total Assets was $12,870 Mil.
Property, Plant and Equipment(Net PPE) was $7,940 Mil.
Depreciation, Depletion and Amortization(DDA) was $442 Mil.
Selling, General & Admin. Expense(SGA) was $152 Mil.
Total Current Liabilities was $1,274 Mil.
Long-Term Debt was $5,593 Mil.
Net Income was 90.9 + 351.9 + 230.6 + 238.3 = $912 Mil.
Non Operating Income was -12.7 + -2.9 + -1.4 + -3.8 = $-21 Mil.
Cash Flow from Operations was 572.7 + -32.1 + 530.9 + 231.7 = $1,303 Mil.
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.



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)
=(251.9 / 4409) / (156.9 / 4853)
=0.05713314 / 0.03233052
=1.7672

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)
=(685.9 / 4853) / (165 / 4409)
=0.39728003 / 0.38806986
=1.0237

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 - (1764.2 + 7939.6) / 12869.8) / (1 - (3338.7 + 5050.2) / 11659.8)
=0.24600227 / 0.28052797
=0.8769

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
=4409 / 4853
=0.9085

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))
=(395.3 / (395.3 + 5050.2)) / (442 / (442 + 7939.6))
=0.07259205 / 0.05273456
=1.3766

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)
=(152.1 / 4409) / (164.4 / 4853)
=0.03449762 / 0.03387595
=1.0184

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)
=((5592.6 + 1273.6) / 12869.8) / ((4592.4 + 1048.8) / 11659.8)
=0.53351256 / 0.48381619
=1.1027

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
=(911.7 - -20.8 - 1303.2) / 12869.8
=-0.0288

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 -2.02 signals that the company is likely to 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

Jun13Sep13Dec13Mar14Jun14Sep14Dec14Mar15Jun15Sep15
DSRI 0.88540.61751.17670.9971.02840.97390.95260.89460.86181.7672
GMI 1.03731.14211.1081.19871.22891.15471.22771.13110.95421.0237
AQI 0.89580.95491.08630.77880.8670.86820.76321.05250.9880.8769
SGI 0.92280.88780.89690.89140.85340.8620.86640.86590.87560.9085
DEPI 1.11131.14011.06781.11481.15231.22521.37211.36971.34421.3766
SGAI 1.42621.38971.06550.99510.99041.04161.05621.06221.07211.0184
LVGI 1.51341.35141.46591.73131.31091.30261.33651.06381.03431.1027
TATA -0.0057-0.01660.0060.01950.01250.0237-0.0005-0.0232-0.0355-0.0288
M-score -2.93-3.12-2.45-2.70-2.54-2.57-2.70-2.70-2.90-2.02
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