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GuruFocus has detected 5 Warning Signs with HollyFrontier Corp $HFC.
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HollyFrontier Corp (NYSE:HFC)
Beneish M-Score
-2.59 (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.

HollyFrontier Corp has a M-score of -2.59 suggests that the company is not a manipulator.

HFC' s Beneish M-Score Range Over the Past 10 Years
Min: -3.87   Max: -0.49
Current: -2.59

-3.87
-0.49

During the past 13 years, the highest Beneish M-Score of HollyFrontier Corp was -0.49. The lowest was -3.87. And the median was -2.46.


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 HollyFrontier 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 * 1.7106+0.528 * 1.306+0.404 * 0.8108+0.892 * 0.7959+0.115 * 0.9342
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.3064+4.679 * -0.0912-0.327 * 1.5521
=-2.59

* 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 $479 Mil.
Revenue was 2955.068 + 2847.27 + 2714.638 + 2018.724 = $10,536 Mil.
Gross Profit was 243.264 + 248.889 + 353.62 + 197.099 = $1,043 Mil.
Total Current Assets was $2,851 Mil.
Total Assets was $9,436 Mil.
Property, Plant and Equipment(Net PPE) was $4,008 Mil.
Depreciation, Depletion and Amortization(DDA) was $363 Mil.
Selling, General & Admin. Expense(SGA) was $126 Mil.
Total Current Liabilities was $1,083 Mil.
Long-Term Debt was $2,235 Mil.
Net Income was 53.165 + 74.497 + -409.368 + 21.253 = $-260 Mil.
Non Operating Income was -3.683 + 3.874 + 3.751 + -5.888 = $-2 Mil.
Cash Flow from Operations was 158.047 + 133.898 + 303.69 + 6.636 = $602 Mil.
Accounts Receivable was $352 Mil.
Revenue was 2943.559 + 3585.823 + 3701.912 + 3006.626 = $13,238 Mil.
Gross Profit was 68.28 + 441.115 + 703.752 + 498.203 = $1,711 Mil.
Total Current Assets was $1,448 Mil.
Total Assets was $8,388 Mil.
Property, Plant and Equipment(Net PPE) was $4,116 Mil.
Depreciation, Depletion and Amortization(DDA) was $346 Mil.
Selling, General & Admin. Expense(SGA) was $121 Mil.
Total Current Liabilities was $861 Mil.
Long-Term Debt was $1,040 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)
=(479.199 / 10535.7) / (351.978 / 13237.92)
=0.04548336 / 0.02658862
=1.7106

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)
=(1711.35 / 13237.92) / (1042.872 / 10535.7)
=0.12927635 / 0.0989846
=1.306

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 - (2851.009 + 4008.448) / 9435.661) / (1 - (1448.065 + 4115.662) / 8388.299)
=0.27302846 / 0.33672762
=0.8108

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
=10535.7 / 13237.92
=0.7959

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))
=(346.151 / (346.151 + 4115.662)) / (363.027 / (363.027 + 4008.448))
=0.0775808 / 0.08304451
=0.9342

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)
=(125.648 / 10535.7) / (120.846 / 13237.92)
=0.01192593 / 0.00912878
=1.3064

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)
=((2235.137 + 1083.229) / 9435.661) / ((1040.04 + 860.615) / 8388.299)
=0.35168347 / 0.22658408
=1.5521

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
=(-260.453 - -1.946 - 602.271) / 9435.661
=-0.0912

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.

HollyFrontier Corp has a M-score of -2.59 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.

HollyFrontier Corp Annual Data

Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15Dec16
DSRI 1.29650.38393.20250.75660.38480.68761.11370.84890.89081.7106
GMI 0.9571.22071.99730.91320.41630.80411.94721.65520.38881.306
AQI 2.23181.53880.81320.88054.16810.9491.06631.09381.11940.8108
SGI 1.1911.2230.82491.72171.85511.30131.00350.98030.66980.7959
DEPI 1.1941.4670.89540.91861.26140.70360.8610.91091.16110.9342
SGAI 0.91290.65721.32330.68190.9140.81960.99550.91361.57431.3064
LVGI 1.0880.87261.28371.07940.54550.89290.91760.93310.91391.5521
TATA -0.0647-0.0214-0.0607-0.0491-0.03160.0059-0.0109-0.0508-0.0291-0.0912
M-score -1.86-2.46-0.60-2.36-1.27-2.56-1.88-2.46-3.34-2.59

HollyFrontier Corp Quarterly Data

Sep14Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16Dec16
DSRI 0.92120.84890.86180.99981.05420.89081.20051.11361.04991.7106
GMI 1.57621.65521.12160.73140.71580.38880.53780.90611.18231.306
AQI 1.01311.09381.12581.15521.14661.11941.12980.9910.97720.8108
SGI 0.99150.98030.88820.80270.71780.66980.68130.69060.72190.7959
DEPI 0.9160.91090.94981.08021.06641.16111.12541.00090.99160.9342
SGAI 0.90490.91361.05041.19341.39711.57431.46331.51641.43281.3064
LVGI 1.0070.93310.85780.82980.82420.91391.05091.32481.33861.5521
TATA -0.0289-0.0508-0.0267-0.0066-0.0329-0.0291-0.0245-0.1114-0.1027-0.0912
M-score -2.38-2.46-2.68-2.73-2.93-3.34-2.97-3.42-3.26-2.59
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