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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: -3.31   Max: -0.02
Current: -2.7

-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 -2.54.


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 * 0.8946+0.528 * 1.1311+0.404 * 1.0525+0.892 * 0.8659+0.115 * 1.3697
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0622+4.679 * -0.0232-0.327 * 1.0638
=-2.70

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

This Year (Mar15) TTM:Last Year (Mar14) TTM:
Accounts Receivable was $167 Mil.
Revenue was 953.6 + 1216.5 + 921.4 + 1472.7 = $4,564 Mil.
Gross Profit was 415.8 + 444.3 + 301.1 + 590.3 = $1,752 Mil.
Total Current Assets was $2,380 Mil.
Total Assets was $11,485 Mil.
Property, Plant and Equipment(Net PPE) was $5,925 Mil.
Depreciation, Depletion and Amortization(DDA) was $403 Mil.
Selling, General & Admin. Expense(SGA) was $150 Mil.
Total Current Liabilities was $1,311 Mil.
Long-Term Debt was $4,593 Mil.
Net Income was 230.6 + 238.3 + 130.9 + 312.6 = $912 Mil.
Non Operating Income was -1.4 + -3.8 + -2.2 + -3.1 = $-11 Mil.
Cash Flow from Operations was 530.9 + 231.7 + 621.6 + -194.7 = $1,190 Mil.
Accounts Receivable was $216 Mil.
Revenue was 1132.6 + 1326.3 + 1097 + 1714.9 = $5,271 Mil.
Gross Profit was 442.8 + 593.8 + 386.1 + 865.2 = $2,288 Mil.
Total Current Assets was $4,911 Mil.
Total Assets was $12,476 Mil.
Property, Plant and Equipment(Net PPE) was $4,282 Mil.
Depreciation, Depletion and Amortization(DDA) was $409 Mil.
Selling, General & Admin. Expense(SGA) was $163 Mil.
Total Current Liabilities was $1,436 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)
=(167.1 / 4564.2) / (215.7 / 5270.8)
=0.03661102 / 0.04092358
=0.8946

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)
=(444.3 / 5270.8) / (415.8 / 4564.2)
=0.43407073 / 0.38374743
=1.1311

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 - (2379.7 + 5925) / 11485.3) / (1 - (4911.1 + 4281.9) / 12475.5)
=0.2769279 / 0.26311571
=1.0525

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
=4564.2 / 5270.8
=0.8659

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))
=(408.8 / (408.8 + 4281.9)) / (402.6 / (402.6 + 5925))
=0.08715117 / 0.06362602
=1.3697

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)
=(150.3 / 4564.2) / (163.4 / 5270.8)
=0.0329302 / 0.03100099
=1.0622

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 + 1311.3) / 11485.3) / ((4592.3 + 1435.7) / 12475.5)
=0.51403098 / 0.48318705
=1.0638

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
=(912.4 - -10.5 - 1189.5) / 11485.3
=-0.0232

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 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

Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14Dec14Mar15
DSRI 0.7980.56960.88540.61751.17670.9971.02840.97390.95260.8946
GMI 0.9310.91821.03731.14211.1081.19871.22891.15471.22771.1311
AQI 0.88760.94280.89580.95491.08630.77880.8670.86820.76321.0525
SGI 1.0010.91650.92280.88780.89690.89140.85340.8620.86640.8659
DEPI 1.03161.00291.11131.14011.06781.11481.15231.22521.37211.3697
SGAI 1.33481.51341.42621.38971.06550.99510.99041.04161.05621.0622
LVGI 0.84980.93571.51341.35141.46591.73131.31091.30261.33651.0638
TATA -0.0519-0.0494-0.0057-0.01660.0060.01950.01250.0237-0.0005-0.0232
M-score -2.99-3.31-2.93-3.12-2.45-2.70-2.54-2.57-2.70-2.70
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