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GuruFocus has detected 7 Warning Signs with CSX Corp $FRA:CXR.
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CSX Corp (FRA:CXR)
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 -2.67 suggests that the company is not a manipulator.

FRA:CXR' 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 * 1.0499+0.528 * 0.9644+0.404 * 1.0072+0.892 * 0.9395+0.115 * 0.9885
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0237+4.679 * -0.0332-0.327 * 1.0232
=-2.67

* 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 €889 Mil.
Revenue was 2878.94587165 + 2414.6841308 + 2406.5503738 + 2350.93390805 = €10,051 Mil.
Gross Profit was 2089.29756375 + 1714.33663013 + 1698.11320755 + 1628.05316092 = €7,130 Mil.
Total Current Assets was €2,358 Mil.
Total Assets was €33,571 Mil.
Property, Plant and Equipment(Net PPE) was €29,529 Mil.
Depreciation, Depletion and Amortization(DDA) was €1,181 Mil.
Selling, General & Admin. Expense(SGA) was €2,868 Mil.
Total Current Liabilities was €1,934 Mil.
Long-Term Debt was €10,392 Mil.
Net Income was 434.16437577 + 405.417446316 + 396.048415806 + 319.683908046 = €1,555 Mil.
Non Operating Income was -101.4314153 + 11.583355609 + 7.11997152011 + 6.28591954023 = €-76 Mil.
Cash Flow from Operations was 524.220305242 + 798.360509668 + 745.817016732 + 677.083333333 = €2,745 Mil.
Accounts Receivable was €901 Mil.
Revenue was 2553.01569815 + 2618.72939499 + 2730.10781431 + 2796.82158366 = €10,699 Mil.
Gross Profit was 1746.07546131 + 1801.65731088 + 1907.68956607 + 1863.62376421 = €7,319 Mil.
Total Current Assets was €2,607 Mil.
Total Assets was €31,897 Mil.
Property, Plant and Equipment(Net PPE) was €27,700 Mil.
Depreciation, Depletion and Amortization(DDA) was €1,094 Mil.
Selling, General & Admin. Expense(SGA) was €2,982 Mil.
Total Current Liabilities was €1,792 Mil.
Long-Term Debt was €9,653 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)
=(889.183808892 / 10051.1142843) / (901.496373818 / 10698.6744911)
=0.08846619 / 0.08426244
=1.0499

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)
=(7319.04610246 / 10698.6744911) / (7129.80056235 / 10051.1142843)
=0.68410775 / 0.70935424
=0.9644

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 - (2357.56943786 + 29528.8652953) / 33570.9545929) / (1 - (2607.17892224 + 27700.3580281) / 31896.6308639)
=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
=10051.1142843 / 10698.6744911
=0.9395

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))
=(1094.49759317 / (1094.49759317 + 27700.3580281)) / (1180.88813648 / (1180.88813648 + 29528.8652953))
=0.03801018 / 0.03845319
=0.9885

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)
=(2868.0285221 / 10051.1142843) / (2981.99396299 / 10698.6744911)
=0.28534434 / 0.27872555
=1.0237

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)
=((10391.5063039 + 1933.83259077) / 33570.9545929) / ((9652.98815753 + 1791.97649867) / 31896.6308639)
=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
=(1555.31414594 - -76.4421686307 - 2745.48116498) / 33570.9545929
=-0.0332

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 -2.67 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 0.95151.20870.74471.29641.11490.99990.97941.17041.05530.9677
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 -2.88-2.73-2.80-2.54-2.70-2.53-2.74-2.52-2.79-2.69

CSX Corp Quarterly Data

Sep14Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16Dec16
DSRI 1.15611.11691.14230.9890.88640.88840.80960.95291.01791.0499
GMI 1.01390.99760.96320.94060.93680.94030.95050.9680.97130.9644
AQI 1.03080.96560.92260.9170.92130.86810.89380.90240.90761.0072
SGI 1.02721.06761.151.1781.1571.10830.99810.93540.9060.9395
DEPI 1.05581.09741.16651.0570.98720.95880.87780.93530.95450.9885
SGAI 1.00671.02321.03391.05681.06381.04421.0321.0241.03291.0237
LVGI 0.99830.97620.98241.00390.99141.02061.01261.00250.99231.0232
TATA -0.0343-0.04-0.0376-0.041-0.045-0.0424-0.0478-0.05-0.0505-0.0332
M-score -2.45-2.50-2.42-2.59-2.73-2.79-2.97-2.88-2.84-2.67
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