Switch to:
GuruFocus has detected 4 Warning Signs with CF Industries Holdings Inc $CF.
More than 500,000 people have already joined GuruFocus to track the stocks they follow and exchange investment ideas.
CF Industries Holdings Inc (NYSE:CF)
Beneish M-Score
-2.47 (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 -2.47 suggests that the company is not a manipulator.

CF' s Beneish M-Score Range Over the Past 10 Years
Min: -3.08   Max: -1.84
Current: -2.47

-3.08
-1.84

During the past 13 years, the highest Beneish M-Score of CF Industries Holdings Inc was -1.84. The lowest was -3.08. And the median was -2.67.


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 * 1.2637+0.528 * 1.5753+0.404 * 0.7846+0.892 * 0.8554+0.115 * 0.8109
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.818+4.679 * -0.0479-0.327 * 0.8025
=-2.47

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

This Year (Dec16) TTM:Last Year (Dec15) TTM:
Accounts Receivable was $227 Mil.
Revenue was 867 + 680 + 1134 + 1004 = $3,685 Mil.
Gross Profit was 94 + 2 + 527 + 217 = $840 Mil.
Total Current Assets was $2,655 Mil.
Total Assets was $15,131 Mil.
Property, Plant and Equipment(Net PPE) was $9,652 Mil.
Depreciation, Depletion and Amortization(DDA) was $678 Mil.
Selling, General & Admin. Expense(SGA) was $353 Mil.
Total Current Liabilities was $686 Mil.
Long-Term Debt was $5,778 Mil.
Net Income was -320 + -30 + 47 + 26 = $-277 Mil.
Non Operating Income was -166 + -1 + 0 + -2 = $-169 Mil.
Cash Flow from Operations was 26 + 145 + 100 + 346 = $617 Mil.
Accounts Receivable was $210 Mil.
Revenue was 1115 + 928 + 1311 + 954 = $4,308 Mil.
Gross Profit was 280 + 165 + 686 + 416 = $1,547 Mil.
Total Current Assets was $1,127 Mil.
Total Assets was $12,683 Mil.
Property, Plant and Equipment(Net PPE) was $8,539 Mil.
Depreciation, Depletion and Amortization(DDA) was $480 Mil.
Selling, General & Admin. Expense(SGA) was $227 Mil.
Total Current Liabilities was $1,215 Mil.
Long-Term Debt was $5,537 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)
=(227 / 3685) / (210 / 4308)
=0.06160109 / 0.04874652
=1.2637

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)
=(1547 / 4308) / (840 / 3685)
=0.35909935 / 0.22795115
=1.5753

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 - (2655 + 9652) / 15131) / (1 - (1127 + 8539) / 12683)
=0.18663671 / 0.23787747
=0.7846

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
=3685 / 4308
=0.8554

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))
=(480 / (480 + 8539)) / (678 / (678 + 9652))
=0.05322098 / 0.06563408
=0.8109

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)
=(353 / 3685) / (227 / 4308)
=0.09579376 / 0.05269266
=1.818

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)
=((5778 + 686) / 15131) / ((5537 + 1215) / 12683)
=0.42720243 / 0.53236616
=0.8025

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
=(-277 - -169 - 617) / 15131
=-0.0479

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 -2.47 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 local exchange's currency.

CF Industries Holdings Inc Annual Data

Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15Dec16
DSRI 0.96280.82791.43720.93880.72640.7981.17670.95271.2451.2637
GMI 0.29790.77940.9691.08180.62650.9311.1081.2281.04391.5753
AQI 1.16752.24541.36762.37940.96150.88761.08630.76890.83710.7846
SGI 1.3561.42240.66521.52011.53791.0010.89690.86630.90830.8554
DEPI 1.14620.90291.17091.23520.91171.03161.06781.37041.24760.8109
SGAI 0.66460.69891.39051.10970.79671.16651.21921.05691.64421.818
LVGI 1.13711.08730.56681.70540.89120.84981.46591.34651.07520.8025
TATA -0.13140.019-0.1319-0.0978-0.0602-0.04880.0049-0.0026-0.0397-0.0482
M-score -3.08-1.77-2.77-2.15-2.69-2.95-2.48-2.71-2.67-2.47

CF Industries Holdings Inc Quarterly Data

Sep14Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16Dec16
DSRI 0.97390.95270.89460.86181.7671.2451.64221.29130.92131.2637
GMI 1.15471.2281.13140.95431.02391.04391.24041.47511.48731.5753
AQI 0.86820.76891.05250.9880.87690.83710.69740.65560.77390.7846
SGI 0.8620.86630.8660.87550.90860.90830.95480.94960.8920.8554
DEPI 1.22521.37041.36941.34361.37511.24761.1911.01170.89860.8109
SGAI 1.18311.05691.06221.07291.26931.64421.71423.00762.30611.818
LVGI 1.30261.34651.06381.03431.10271.07520.85050.8240.78010.8025
TATA 0.0224-0.0026-0.0252-0.0379-0.0317-0.0396-0.0334-0.0608-0.0417-0.0479
M-score -2.60-2.71-2.71-2.91-2.08-2.67-2.13-2.72-2.84-2.47
Get WordPress Plugins for easy affiliate links on Stock Tickers and Guru Names | Earn affiliate commissions by embedding GuruFocus Charts
GuruFocus Affiliate Program: Earn up to $400 per referral. ( Learn More)
FEEDBACK