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GuruFocus has detected 7 Warning Signs with CSX Corp $CSX.
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CSX Corp (NAS:CSX)
Beneish M-Score
-2.72 (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.

CSX Corp has a M-score of -2.72 suggests that the company is not a manipulator.

CSX' s Beneish M-Score Range Over the Past 10 Years
Min: -3.43   Max: -2.41
Current: -2.72

-3.43
-2.41

During the past 13 years, the highest Beneish M-Score of CSX Corp was -2.41. The lowest was -3.43. And the median was -2.71.


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 CSX Corp 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 * 1.0192+0.528 * 0.965+0.404 * 1.0072+0.892 * 0.9372+0.115 * 0.9601
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0245+4.679 * -0.0352-0.327 * 1.0232
=-2.72

* 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 $938 Mil.
Revenue was 3037 + 2710 + 2704 + 2618 = $11,069 Mil.
Gross Profit was 2204 + 1924 + 1908 + 1813 = $7,849 Mil.
Total Current Assets was $2,487 Mil.
Total Assets was $35,414 Mil.
Property, Plant and Equipment(Net PPE) was $31,150 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,301 Mil.
Selling, General & Admin. Expense(SGA) was $3,159 Mil.
Total Current Liabilities was $2,040 Mil.
Long-Term Debt was $10,962 Mil.
Net Income was 458 + 455 + 445 + 356 = $1,714 Mil.
Non Operating Income was -107 + 13 + 8 + 7 = $-79 Mil.
Cash Flow from Operations was 553 + 896 + 838 + 754 = $3,041 Mil.
Accounts Receivable was $982 Mil.
Revenue was 2781 + 2939 + 3064 + 3027 = $11,811 Mil.
Gross Profit was 1902 + 2022 + 2141 + 2017 = $8,082 Mil.
Total Current Assets was $2,840 Mil.
Total Assets was $34,745 Mil.
Property, Plant and Equipment(Net PPE) was $30,174 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,208 Mil.
Selling, General & Admin. Expense(SGA) was $3,290 Mil.
Total Current Liabilities was $1,952 Mil.
Long-Term Debt was $10,515 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)
=(938 / 11069) / (982 / 11811)
=0.08474117 / 0.08314283
=1.0192

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)
=(8082 / 11811) / (7849 / 11069)
=0.68427737 / 0.70909748
=0.965

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 - (2487 + 31150) / 35414) / (1 - (2840 + 30174) / 34745)
=0.0501779 / 0.04982012
=1.0072

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
=11069 / 11811
=0.9372

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))
=(1208 / (1208 + 30174)) / (1301 / (1301 + 31150))
=0.0384934 / 0.04009121
=0.9601

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)
=(3159 / 11069) / (3290 / 11811)
=0.28539163 / 0.27855389
=1.0245

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)
=((10962 + 2040) / 35414) / ((10515 + 1952) / 34745)
=0.36714294 / 0.35881422
=1.0232

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
=(1714 - -79 - 3041) / 35414
=-0.0352

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.

CSX Corp has a M-score of -2.72 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.

CSX Corp Annual Data

Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15Dec16
DSRI 0.95370.84031.11890.84830.90811.1170.92371.01870.9331.0192
GMI 0.93771.05110.91221.11051.02870.99410.99960.99830.93910.965
AQI 0.81030.92981.01331.13391.00871.05041.06170.96560.86811.0072
SGI 1.04851.12210.80331.17641.1090.99731.02241.05350.93230.9372
DEPI 1.01351.00951.03220.98451.01750.96281.00471.00441.00560.9601
SGAI 0.9720.88191.10750.95610.93710.98541.01631.02151.0451.0245
LVGI 1.1411.05370.96231.03651.02280.98940.94590.97621.02061.0232
TATA -0.0345-0.0613-0.0342-0.0613-0.0564-0.0375-0.0442-0.042-0.043-0.0352
M-score -2.79-2.80-2.75-2.64-2.71-2.53-2.70-2.62-2.90-2.72

CSX Corp Quarterly Data

Sep14Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16Dec16
DSRI 1.08761.01870.97860.94460.91410.9330.92481.01051.04241.0192
GMI 1.01460.99830.96360.94140.93670.93910.94960.96680.97060.965
AQI 1.03080.96560.92260.9170.92130.86810.89380.90240.90761.0072
SGI 1.05251.05351.05041.01880.97710.93230.89890.88310.88470.9372
DEPI 0.99541.00441.00821.01371.01871.00560.99550.98730.97480.9601
SGAI 1.00671.02151.02881.05511.06381.0451.03651.02531.03261.0245
LVGI 0.99830.97620.98241.00390.99141.02061.01261.00250.99231.0232
TATA -0.0358-0.042-0.0431-0.0434-0.0462-0.043-0.0476-0.0494-0.0501-0.0352
M-score -2.50-2.62-2.71-2.79-2.87-2.90-2.94-2.87-2.84-2.72
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